N-CSRS 1 primary-document.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES
 
 
Investment Company Act file number
 
811-23403
 
Principal Diversified Select Real Asset Fund
(Exact name of registrant as specified in charter)
 
 801 Grand Avenue, Des Moines, IA 50309
(Address of principal executive offices)                                                         (Zip code)
 
Principal Global Investors, LLC, 801 Grand Avenue, Des Moines, IA 50309
(Name and address of agent for service)
                                                                                               
Registrant’s telephone number, including area code:
515-248-0156
 
Date of fiscal year end:
March 31, 2021
 
Date of reporting period:
September 30, 2020
 

ITEM 1 – REPORT TO STOCKHOLDERS
 
Principal
Diversified
Select
Real
Asset
Fund
Semiannual
Report
September
30,
2020
Sign
up
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eDelivery!
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are,
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Note:
If
your
shares
are
not
held
directly
with
Principal
Funds
but
through
a
brokerage
firm,
please
contact
your
broker
for
electronic
delivery
options
available.
Rev.
01/2020
EE11865PFI-03
FACTS
WHAT
DOES
PRINCIPAL
FUNDS
DO
WITH
YOUR
PERSONAL
INFORMATION?
Why?
Financial
companies
choose
how
they
share
your
personal
information.
Federal
law
gives
consumers
the
right
to
limit
some
but
not
all
sharing.
Federal
law
also
requires
us
to
tell
you
how
we
collect,
share,
and
protect
your
personal
information.
Please
read
this
notice
carefully
to
understand
what
we
do.
What?
The
types
of
personal
information
we
collect
and
share
depend
on
the
product
or
service
you
have
with
us.
This
information
can
include:
•
Social
Security
number
and
income
•
Assets
and
transaction
history
•
Account
transactions
and
account
balances
When
you
are
no
longer
our
customer,
we
continue
to
share
your
information
as
described
in
this
notice
How?
All
financial
companies
need
to
share
customers’
personal
information
to
run
their
everyday
business.
In
the
section
below,
we
list
the
reasons
financial
companies
can
share
their
customers’
personal
information;
the
reasons
Principal
Funds
chooses
to
share;
and
whether
you
can
limit
this
sharing.
REASONS
WE
CAN
SHARE
YOUR
PERSONAL
INFORMATION
DOES
PRINCIPAL
FUNDS
SHARE?
CAN
YOU
LIMIT
THIS
SHARING?
For
our
everyday
business
purposes
—such
as
to
process
your
transactions,
maintain
your
account(s),
respond
to
court
orders
and
legal
investigations,
or
report
to
credit
bureaus
Yes
No
For
our
marketing
purposes
—to
offer
our
products
and
services
to
you
Yes
No
For
joint
marketing
with
other
financial
companies
No
We
don’t
share
For
our
affiliates’
everyday
business
purposes
—
information
about
your
transactions
and
experiences
Yes
No
For
our
affiliates’
everyday
business
purposes
—
information
about
your
creditworthiness
No
We
don’t
share
For
nonaffiliates
to
market
to
you
No
We
don’t
share
Questions?
Call
1-800-222-5852
or
go
to
www.principalfunds.com/customer-support/contact-us
Page
2
EE11865PFI-03
|
01/2020
Who
we
are
Who
is
providing
this
notice?
Principal
Funds
includes
Principal
Funds,
Inc.,
Principal
Funds
Distributor,
Inc.,
and
Principal
Diversified
Select
Real
Asset
Fund.
What
we
do
How
does
Principal
Funds
protect
my
personal
information?
To
protect
your
personal
information
from
unauthorized
access
and
use,
we
use
security
measures
that
comply
with
federal
law.
These
measures
include
computer
safeguards
and
secured
files
and
buildings.
How
does
Principal
Funds
collect
my
personal
information?
We
collect
your
personal
information,
for
example,
when
you
•
Open
an
account
or
seek
advice
about
your
investments
•
Direct
us
to
buy
securities
or
make
deposits,
or
withdrawals
from
your
account
•
Give
us
your
contact
information
or
show
your
government
issued
ID
We
also
collect
your
personal
information
from
others,
such
as
affiliates,
or
other
companies.
Why
can’t
I
limit
all
sharing?
Federal
law
gives
you
the
right
to
limit
only
•
sharing
for
affiliates’
everyday
business
purposes—information
about
your
creditworthiness
•
affiliates
from
using
your
information
to
market
to
you
•
sharing
for
nonaffiliates
to
market
to
you
State
laws
and
individual
companies
may
give
you
additional
rights
to
limit
sharing.
Definitions
Affiliates
Companies
related
by
common
ownership
or
control.
They
can
be
financial
and
nonfinancial
companies.
•
Our
affiliates
include
companies
of
Principal
Financial
Group
®
Nonaffiliates
Companies
not
related
by
common
ownership
or
control.
They
can
be
financial
and
nonfinancial
companies.
•
Principal
Funds
does
not
share
with
nonaffiliates
so
they
can
market
to
you.
Joint
marketing
A
formal
agreement
between
nonaffiliated
financial
companies
that
together
market
financial
products
or
services
to
you.
•
Principal
Funds
does
not
jointly
market.
Other
important
information
This
Privacy
Notice
governs
information
that
you
provide
to
Principal
(or
that
we
otherwise
receive)
when
you
apply
for
or
receive
a
product
or
service
used
primarily
for
personal,
family
or
household
purposes.
We
may
collect
additional
information
depending
on
the
nature
of
your
relationship
with
Principal
or
if
you
interact
with
us
through
our
website
or
other
digital
technologies.
Details
about
how
we
protect
and
use
this
additional
information,
including
information
about
your
privacy
rights
under
California
law
such
as
the
California
Consumer
Privacy
Act,
are
available
online
at
www.principal.com/privacy-policies
.
If
you
do
not
have
access
to
www.principal.com/privacy-policies,
please
contact
us
at
1-800-986-3343
to
have
a
copy
mailed
to
you.
Table
of
Contents
Not
FDIC
or
NCUA
insured
May
lose
value
•
Not
a
deposit
•
No
bank
or
credit
union
guarantee
Not
insured
by
any
Federal
government
agency
Financial
Statements
1
Notes
to
Financial
Statements
5
Schedule
of
Investments
14
Financial
Highlights
(includes
performance
information)
20
Shareholder
Expense
Example
22
Supplemental
Information
23
Statement
of
Assets
and
Liabilities
September
30,
2020
(unaudited)
1
See
accompanying
notes.
Amounts
in
thousands,
except
per
share
amounts
Principal
Diversified
Select
Real
Asset
Fund
Investment
in
securities--at
cost
......................................................................................................................
$
142,018‌
Assets
Investment
in
securities--at
value 
......................................................................................................................
$
140,745‌
Cash
.....................................................................................................................................................
9‌
Receivables:
Dividends
and
interest
.............................................................................................................................
547‌
Expense
reimbursement
from
Manager
...........................................................................................................
123‌
Investment
securities
sold
.........................................................................................................................
272‌
Prepaid
expenses
........................................................................................................................................
8‌
Total
Assets  
141,704‌
Liabilities
Accrued
management
and
investment
advisory
fees
....................................................................................................
195‌
Accrued
transfer
agent
fees
.............................................................................................................................
53‌
Accrued
directors'
expenses
.............................................................................................................................
2‌
Accrued
professional
fees
...............................................................................................................................
51‌
Accrued
valuation
fees
..................................................................................................................................
83‌
Cash
overdraft
...........................................................................................................................................
71‌
Payables:
Investment
securities
purchased
..................................................................................................................
41‌
Total
Liabilities  
496‌
Net
Assets
Applicable
to
Outstanding
Shares
........................................................................................................
$
141,208‌
Net
Assets
Consist
of:
Capital
shares
and
additional
paid-in-capital
...........................................................................................................
$
147,181‌
Total
distributable
earnings
(accumulated
loss)
.........................................................................................................
(
5,973‌
)
Total
Net
Assets 
$
141,208‌
Capital
Stock
(par
value:
$.01
per
share):
Net
Asset
Value
Per
Share:
Class
A
:
Net
Assets
......................................................................................................................................
$
239‌
Shares
Issued
and
Outstanding
....................................................................................................................
10‌
Net
Asset
Value
per
share
.........................................................................................................................
$
23
.12‌
(a)
Maximum
Offering
Price
.........................................................................................................................
$
24
.53‌
Class
Y
:
Net
Assets
......................................................................................................................................
$
140,729‌
Shares
Issued
and
Outstanding
....................................................................................................................
6,063‌
Net
Asset
Value
per
share
.........................................................................................................................
$
23
.21‌
Institutional
:
Net
Assets
.................................................................................................................................
$
240‌
Shares
Issued
and
Outstanding
....................................................................................................................
10‌
Net
Asset
Value
per
share
.........................................................................................................................
$
23
.15‌
(a)
Redemption
price
per
share
is
equal
to
net
asset
value
per
share
less
any
applicable
contingent
deferred
sales
charge.
Statement
of
Operations
Period
Ended
September
30,
2020
(unaudited)
2
See
accompanying
notes.
Amounts
in
thousands
Principal
Diversified
Select
Real
Asset
Fund
Net
Investment
Income
(Loss)
Income:
Dividends
..............................................................................................................................................
$
1,787‌
Withholding
tax
.......................................................................................................................................
(
97‌
)
Interest
.................................................................................................................................................
1,251‌
Total
Income
2,941‌
Expenses:
Management
and
investment
advisory
fees
...........................................................................................................
1,082‌
Registration
fees
-
Class
A
............................................................................................................................
17‌
Registration
fees
-
Class
Y
............................................................................................................................
16‌
Registration
fees
-
Institutional
.......................................................................................................................
17‌
Shareholder
reports
-
Class
A
.........................................................................................................................
2‌
Shareholder
reports
-
Class
Y
.........................................................................................................................
4‌
Shareholder
reports
-
Institutional
....................................................................................................................
2‌
Transfer agent
fees
-
Class
A
..........................................................................................................................
21‌
Transfer agent
fees
-
Class
Y
..........................................................................................................................
33‌
Transfer agent
fees
-
Institutional
.....................................................................................................................
27‌
Custodian
fees
.........................................................................................................................................
16‌
Directors'
expenses
....................................................................................................................................
2‌
Professional fees
......................................................................................................................................
63‌
Valuation
expenses
....................................................................................................................................
62‌
Other
expenses
........................................................................................................................................
70‌
Total
Gross
Expenses
1,434‌
Less: Reimbursement
from
Manager
.................................................................................................................
337‌
Less:
Reimbursement
from
Manager
-
Class
A
.......................................................................................................
41‌
Less:
Reimbursement
from
Manager
-
Class
Y
.......................................................................................................
263‌
Less:
Reimbursement
from
Manager
-
Institutional
..................................................................................................
46‌
Total
Net
Expenses
747‌
Net
Investment
Income
(Loss)
2,194‌
Net
Realized
and
Unrealized
Gain
(Loss)
on
investments
and
foreign
currencies
Net
realized
gain
(loss)
from:
Investment
transactions
...............................................................................................................................
(
3,081‌
)
Foreign
currency
transactions
.........................................................................................................................
(
25‌
)
Net
change
in
unrealized
appreciation/(depreciation)
of:
Investments
............................................................................................................................................
25,152‌
Translation
of
assets
and
liabilities
in
foreign
currencies
.............................................................................................
3‌
Net
Realized
and
Unrealized
Gain
(Loss)
on
investments
and
foreign
currencies
22,049‌
Net
Increase
(Decrease)
in
Net
Assets
Resulting
from
Operations
$
24,243‌
Statement
of
Changes
in
Net
Assets
(unaudited)
3
See
accompanying
notes.
Amounts
in
thousands
Principal
Diversified
Select
Real
Asset
Fund
Period
Ended
September
30,
2020
Period
Ended
March
31
,
2020
(a)
Operations
Net
investment
income
(loss)
.......................................................................................................
$
2,194‌
$
2,114‌
Net
realized
gain
(loss)
on
investments
and
foreign
currencies
....................................................................
(3,106‌)
(1,792‌)
Net
change
in
unrealized
appreciation/depreciation
of
investments
and
translation
of
assets
&
liabilities
in
foreign
currencies
..
25,155‌
(26,427‌)
Net
Increase
(Decrease)
in
Net
Assets
Resulting
from
Operations
24,243‌
(26,105‌)
Dividends
and
Distributions
to
Shareholders
From
net
investment
income
and
net
realized
gain
on
investments
................................................................
(2,138‌)
(1,974‌)
From
tax
return
of
capital
...........................................................................................................
–‌
(238‌)
Total
Dividends
and
Distributions
(2,138‌)
(2,212‌)
Capital
Share
Transactions
Net
increase
(decrease)
in
capital
share
transactions
...............................................................................
20,208‌
127,112‌
Total
Increase
(Decrease)
in
Net
Assets
42,313‌
98,795‌
Net
Assets
Beginning
of
period
.................................................................................................................
98,895‌
100‌
End
of
period
.......................................................................................................................
$
141,208‌
$
98,895‌
Class
A
Class
Y
Institutional
Capital
Share
Transactions:
Period
Ended
September
30,
2020
Dollars:
Sold
.......................................................................................
$
–‌
$
18,070‌
$
–‌
Reinvested
..................................................................................
3‌
2,131‌
4‌
Net
Increase
(Decrease)
.........................................................................
$
3‌
$
20,201‌
$
4‌
Shares:
Sold
.......................................................................................
–‌
887‌
–‌
Reinvested
..................................................................................
–‌
95‌
–‌
Net
Increase
(Decrease)
.........................................................................
–‌
982‌
–‌
Period Ended
March
31,
2020
(a)
Dollars:
Sold
.......................................................................................
$
225‌
$
124,450‌
$
225‌
Reinvested
..................................................................................
4‌
2,204‌
4‌
Net
Increase
(Decrease)
.........................................................................
$
229‌
$
126,654‌
$
229‌
Shares:
Sold
.......................................................................................
9‌
4,985‌
9‌
Reinvested
..................................................................................
–‌
94‌
–‌
Net
Increase
(Decrease)
.........................................................................
9‌
5,079‌
9‌
Dividends
and
Distributions
to
Shareholders:
Period Ended
September
30,
2020
From
net
investment
income
and
net
realized
gain
on
investments
...........................................
$
(3‌)
$
(2,131‌)
$
(4‌)
Total
Dividends
and
Distributions
$
(3‌)
$
(2,131‌)
$
(4‌)
Period Ended
March
31,
2020
(a)
From
net
investment
income
and
net
realized
gain
on
investments
...........................................
$
(4‌)
$
(1,966‌)
$
(4‌)
From
tax
return
of
capital
........................................................................
–‌
(238‌)
–‌
Total
Dividends
and
Distributions
$
(4‌)
$
(2,204‌)
$
(4‌)
(a)
Period
from
June
25,
2019,
date
operations
commenced,
through
March
31,
2020.
Statement
of
Cash
Flows
Period
Ended
September
30,
2020
(unaudited)
4
See
accompanying
notes.
Amounts
in
thousands
Principal
Diversified
Select
Real
Asset
Fund
Cash
Flows
from
Operating
Activities:
Net increase
in
net
assets
from
operations
..............................................................................
$
24,243
Adjustments
to
reconcile
net
increase
in
net
assets
from
operations
to
net
cash
used
in
operating
activities:
Purchase
of
investment
securities
...............................................................................
(47,914)
Proceeds
from
sale
of
investment
securities
........................................................................
29,297
Net
sales
or
(purchases)
of
short
term
securities
.....................................................................
(1,686)
Net
accretion
of
bond
discounts
and
amortization
of
premiums
..........................................................
97
Change
in
unrealized
(appreciation)
depreciation
on
investments
(25,152)
Net
realized
gain
(loss)
from
investments
..........................................................................
3,081
(Increase)
decrease
in
dividends
and
interest
receivable
................................................................
(29)
(Increase)
decrease
in
investment
securities
sold
.....................................................................
84
Increase
(decrease)
in
accrued
fees,
expenses,
and
expense
reimbursement
from
Manager
.......................................
121
Increase
(decrease)
in
investment
securities
purchased
................................................................
(197)
Net
cash used
by
operating
activities
(18,055)
Cash
Flows
from
Financing
Activities:
Proceeds
from
shares
sold
.....................................................................................
18,070
Increase
(decrease)
in
foreign
currency
cash
overdraft
.................................................................
71
Net
cash provided
by
financing
activities
18,141
Net
increase in
cash
.........................................................................................
86
Cash:
Beginning
of
period
.........................................................................................
$
(77)
End
of
period
..............................................................................................
$
9
Supplemental
disclosure
of
cash
flow
information:
Reinvestment
of
dividends
and
distributions
.......................................................................
$
2,138
Notes
to
Financial
Statements
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
5
1.
Organization
Principal
Diversified
Select
Real
Asset
Fund
(the
"Fund")
is
registered
under
the
Investment
Company
Act
of
1940,
as
amended,
as
a
diversified,
closed-end
management
investment
company.
The
Fund
continuously
offers
three
classes
of
shares:
Class
A,
Class
Y,
and
Institutional
Class.
The
Fund
was
organized
as
a
Delaware
statutory
trust
on
September
21,
2018
pursuant
to
an
Agreement
and
Declaration
of
Trust
governed
by
the
State
of
Delaware.
Principal
Global
Investors,
LLC
(the
“Manager”)
serves
as
the
Fund’s
manager
and
advisor.
The
Fund
is
structured
as
an
interval
fund,
meaning
it
conducts
quarterly
repurchase
offers
of
no
less
than
5%
and
no
more
than
25%
of
the
Fund’s
outstanding
shares
at
net
asset
value.
Repurchase
offers
of
more
than
5%
are
made
solely
at
the
discretion
of
the
Fund’s
Board
of
Trustees
(the
“Board”),
and
shareholders
should
not
rely
on
any
expectation
of
repurchase
offers
being
made
in
excess
of
5%.
Shareholders
should
consider
the
Fund’s
shares
illiquid.
The
Fund’s
shares
are
not
listed
on
any
national
securities
exchange
and
are
not
publicly
traded.
There
is
currently
no
secondary
market
for
the
shares,
and
the
Fund
expects
that
no
secondary
market
will
develop.
An
unlimited
number
of
shares
has
been
authorized
under
the
Agreement
and
Declaration
of
Trust.
Only
eligible
purchasers
can
buy
shares
of
the
Fund
in
that
share
class.
The
Manager
and
Principal
Funds
Distributor,
Inc.
(the
“Distributor”)
(an
affiliate
of
the
Manager),
the
principal
distributor
of
the
Fund,
reserve
the
right
to
broaden,
limit,
and
change
the
designation
of
eligible
purchasers
without
notice.
Shares
of
the
Fund
are
only
sold
in
U.S.
jurisdictions.
Subject
to
eligibility
and
minimum
initial
investment
requirements,
shares
of
the
Fund
may
be
purchased
directly
or
through
intermediary
organizations,
such
as
broker-dealers,
insurance
companies,
plan
sponsors,
third
party
administrators,
and
retirement
plans.
Minimum
initial
investment
requirements
are
$25,000
for
Class
A
shares
and
$100,000
for
Class
Y
and
Institutional
Class
shares.
The
Fund
is
an
investment
company
and
applies
specialized
accounting
and
reporting
under
Accounting
Standards
Codification
Topic
946,
Financial
Services
-
Investment
Companies
.
The
Fund
has
not
provided
financial
support
and
is
not
contractually
required
to
provide
financial
support
to
any
investee.
Effective
June
3,
2019,
the
initial
purchase
of
$25,000
of
Class
A
shares,
$50,000
shares
of
Class
Y
shares,
and
$25,000
of
Institutional
Class
shares
was
made
by
Principal
Financial
Services,
Inc.,
an
affiliate
of
the
Manager.
The
Fund
commenced
operations
on
June
25,
2019.
Prior
to
June
25,
2019,
the
Fund
had
no
operations
other
than
matters
relating
to
its
organization
and
the
initial
purchases
on
June
3,
2019.
All
classes
of
shares
of
the
Fund
represent
interests
in
the
same
portfolio
of
investments
and
will
vote
together
as
a
single
class
except
where
otherwise
required
by
law
or
as
determined
by
the
Board.
In
addition,
the
Board
declares
separate
dividends
on
each
class
of
shares.
The
Fund
may
offer
additional
classes
of
shares
in
the
future.
2.
Significant
Accounting
Policies
The
preparation
of
financial
statements
in
conformity
with
U.S.
generally
accepted
accounting
principles
(“U.S.
GAAP”)
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
and
disclosure
of
contingent
assets
and
liabilities
at
the
date
of
the
financial
statements
and
the
reported
amounts
of
revenues
and
expenses
during
the
reporting
period.
Actual
results
could
differ
from
those
estimates.
The
following
summarizes
the
significant
accounting
policies
of
the
Fund:
Security
Valuation.
The
Fund
values
securities
for
which
market
quotations
are
readily
available
at
fair
value,
which
is
determined
using
the
last
reported
sale
price.
If
no
sales
are
reported,
as
is
regularly
the
case
for
some
securities
traded
over-the-counter,
securities
are
valued
using
the
last
reported
bid
price
or
an
evaluated
bid
price
provided
by
a
pricing
service.
Pricing
services
use
modeling
techniques
that
incorporate
security
characteristics
such
as
current
quotations
by
broker/dealers,
coupon,
maturity,
quality,
type
of
issue,
trading
characteristics,
other
yield
and
risk
factors,
and
other
market
conditions
to
determine
an
evaluated
bid
price.
When
reliable
market
quotations
are
not
considered
to
be
readily
available,
which
may
be
the
case,
for
example,
with
respect
to
restricted
securities,
certain
debt
securities,
preferred
stocks,
and
foreign
securities,
the
investments
are
valued
at
their
fair
value
as
determined
in
good
faith
by
the
Manager
under
procedures
established
and
periodically
reviewed
by
the
Board.
The
Fund
invests
in
other
publicly
traded
investment
funds
which
are
valued
at
the
respective
fund’s
net
asset
value.
In
addition,
the
Fund
invests
a
portion
of
its
assets
in
private
investment
funds
which
are
valued
at
fair
value
based
upon
the
net
asset
value
reported
on
a
periodic
basis.
The
appropriateness
of
the
fair
value
of
these
securities
is
monitored
by
the
Manager.
The
shares
of
other
investment
funds
are
referred
to
as
the
“Underlying
Funds”.
The
value
of
foreign
securities
used
in
computing
the
net
asset
value
per
share
is
generally
determined
as
of
the
close
of
the
foreign
exchange
where
the
security
is
principally
traded.
Events
that
occur
after
the
close
of
the
applicable
foreign
market
or
exchange
but
prior
to
the
calculation
of
the
Fund’s
net
asset
value
are
reflected
in
the
Fund’s
net
asset
value
and
these
securities
are
valued
at
fair
value
as
determined
Notes
to
Financial
Statements
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
6
in
good
faith
by
the
Manager
under
procedures
established
and
periodically
reviewed
by
the
Board.
Many
factors,
provided
by
independent
pricing
services,
are
reviewed
in
the
course
of
making
a
good
faith
determination
of
a
security’s
fair
value,
including,
but
not
limited
to,
price
movements
in
American
depositary
receipts
(“ADRs”),
futures
contracts,
industry
indices,
general
indices,
and
foreign
currencies.
To
the
extent
the
Fund
invests
in
foreign
securities
listed
on
foreign
exchanges
which
trade
on
days
on
which
the
Fund
does
not
determine
net
asset
value,
for
example
weekends
and
other
customary
national
U.S.
holidays,
the
Fund’s
net
asset
value
could
be
significantly
affected
on
days
when
shareholders
cannot
purchase
or
redeem
shares.
Certain
securities
issued
by
companies
in
emerging
market
countries
may
have
more
than
one
quoted
valuation
at
any
given
point
in
time,
sometimes
referred
to
as
a
“local”
price
and
a
“premium”
price.
The
premium
price
is
often
a
negotiated
price,
which
may
not
consistently
represent
a
price
at
which
a
specific
transaction
can
be
affected.
It
is
the
policy
of
the
Fund
to
value
such
securities
at
prices
at
which
it
is
expected
those
shares
may
be
sold,
and
the
Manager
or
any
sub-advisor
is
authorized
to
make
such
determinations
subject
to
such
oversight
by
the
Board
as
may
occasionally
be
necessary.
Currency
Translation.
Foreign
holdings
are
translated
to
U.S.
dollars
using
the
exchange
rate
at
the
daily
close
of
the
New
York
Stock
Exchange.
The
identified
cost
of
the
Fund’s
holdings
is
translated
at
approximate
rates
prevailing
when
acquired.
Income
and
expense
amounts
are
translated
at
approximate
rates
prevailing
when
received
or
paid,
with
daily
accruals
of
such
amounts
reported
at
approximate
rates
prevailing
at
the
date
of
valuation.
Since
the
carrying
amount
of
the
foreign
securities
is
determined
based
on
the
exchange
rate
and
market
values
at
the
close
of
the
period,
it
is
not
practicable
to
isolate
that
portion
of
the
results
of
operations
arising
as
a
result
of
changes
in
the
foreign
exchange
rates
from
the
fluctuations
arising
from
changes
in
the
market
prices
of
securities
during
the
period.
Net
realized
foreign
exchange
gains
or
losses
arise
from
sales
of
foreign
currencies,
currency
gains
or
losses
realized
between
trade
and
settlement
dates
on
security
transactions,
and
the
difference
between
the
amount
of
dividends,
interest
income,
interest
expense,
and
foreign
withholding
taxes
recorded
on
the
books
and
the
U.S.
dollar
equivalent
of
the
amounts
actually
received
or
paid.
Net
unrealized
appreciation
(depreciation)
on
translation
of
assets
and
liabilities
in
foreign
currencies
arise
from
changes
in
the
exchange
rate
relating
to
assets
and
liabilities,
other
than
investments
in
securities,
purchased
and
held
in
non-U.S.
denominated
currencies.
The
Fund
held
securities
denominated
in
foreign
currencies
that
exceeded
5%
of
net
assets
of
the
Fund
as
of
September
30,
2020:
Income
and
Investment
Transactions.
The
Fund
records
investment
transactions
on
a
trade
date
basis.
Trade
date
for
senior
floating
rate
interests
purchased
in
the
primary
market
is
considered
the
date
on
which
the
loan
allocations
are
determined.
Trade
date
for
senior
floating
rate
interests
purchased
in
the
secondary
market
is
the
date
on
which
the
transaction
is
entered
into.
The
identified
cost
basis
has
been
used
in
determining
the
net
realized
gain
or
loss
from
investment
transactions
and
unrealized
appreciation
or
depreciation
of
investments.
The
Fund
records
dividend
income
on
the
ex-dividend
date,
except
dividend
income
from
foreign
securities
whereby
the
ex-dividend
date
has
passed;
such
dividends
are
recorded
as
soon
as
the
Fund
is
informed
of
the
ex-dividend
date.
Interest
income
is
recognized
on
an
accrual
basis.
Discounts
and
premiums
on
securities
are
accreted/amortized,
respectively,
on
the
level
yield
method
over
the
expected
lives
of
the
respective
securities.
Callable
debt
securities
purchased
at
a
premium
are
amortized
to
the
earliest
call
date
and
to
the
callable
amount,
if
other
than
par.
The
Fund
allocates
all
income
and
realized
and
unrealized
gains
or
losses
on
a
daily
basis
to
each
class
of
shares
based
upon
the
relative
proportion
of
the
value
of
shares
outstanding
of
each
class.
Distributions
from
Real
Estate
Investment
Trusts
(“REITs”)
and
private
investment
funds
may
be
characterized
as
ordinary
income,
net
capital
gain,
or
return
of
capital
to
the
Fund.
The
proper
characterization
of
distributions
from
REITs
and
private
investment
funds
is
generally
not
known
until
after
the
end
of
each
calendar
year.
As
such,
estimates
are
used
in
reporting
the
character
of
income
and
distributions
for
financial
statement
purposes.
Expenses.
Expenses
directly
attributed
to
the
Fund
are
charged
to
the
Fund.
Other
expenses
not
directly
attributed
to
the
Fund
are
apportioned
among
the
registered
investment
companies
managed
by
the
Manager.
Management
fees
are
allocated
daily
to
each
class
of
shares
based
upon
the
relative
proportion
of
the
value
of
shares
outstanding
of
each
class.
Expenses
specifically
attributable
to
a
particular
class
are
charged
directly
to
such
class
and
are
included
separately
in
the
statement
of
operations.
In
addition
to
the
expenses
the
Fund
bears
directly,
the
Fund
may
indirectly
bear
a
pro
rata
share
of
the
fees
and
expenses
of
the
Underlying
Funds
in
which
it
invests.
Because
the
Underlying
Funds
have
varied
expense
levels
and
the
Fund
may
own
different
proportions
of
Principal
Diversified
Select
Real
Asset
Fund
Euro
7
.3%
Australian
Dollar
5
.0
2.
Significant
Accounting
Policies
(continued)
Notes
to
Financial
Statements
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
7
Underlying
Funds
at
different
times,
the
amount
of
expense
incurred
indirectly
by
the
Fund
will
vary.
Expenses
included
in
the
statement
of
operations
of
the
Fund
do
not
include
any
expenses
associated
with
the
Underlying
Funds.
Dividends
and
Distributions
to
Shareholders.
Dividends
and
distributions
to
shareholders
of
the
Fund
are
recorded
on
the
ex-dividend
date.
Dividends
and
distributions
to
shareholders
from
net
investment
income
and
net
realized
gain
from
investments
are
determined
in
accordance
with
federal
tax
regulations,
which
may
differ
from
U.S.
GAAP.
These
differences
are
primarily
due
to
differing
treatments
for
losses
deferred
due
to
wash
sales.
Permanent
book
and
tax
basis
differences
are
reclassified
within
the
capital
accounts
based
on
federal
tax-basis
treatment;
temporary
differences
do
not
require
reclassification.
To
the
extent
dividends
and
distributions
exceed
current
and
accumulated
earnings
and
profits
for
federal
income
tax
purposes;
they
are
reported
as
return
of
capital
distributions.
Federal
Income
Taxes.
No
provision
for
federal
income
taxes
is
considered
necessary
because
the
Fund
intends
to
qualify
as
a
“regulated
investment
company”
under
the
Internal
Revenue
Code
and
intends
to
distribute
each
year
substantially
all
of
its
net
investment
income
and
realized
capital
gains
to
shareholders.
Management
evaluates
tax
positions
taken
or
expected
to
be
taken
in
the
course
of
preparing
the
Fund’s
tax
returns
to
determine
whether
it
is
“more
likely
than
not”
that
each
tax
position
would
be
sustained
upon
examination
by
a
taxing
authority
based
on
the
technical
merits
of
the
position.
Tax
positions
not
deemed
to
meet
the
more
likely
than
not
threshold
would
be
recorded
as
a
tax
benefit
or
expense
in
the
current
period.
During
the
period
ended
September
30,
2020,
the
Fund
did
not
record
any
such
tax
benefit
or
expense
in
the
accompanying
financial
statements.
Foreign
Taxes.
The
Fund
may
be
subject
to
foreign
income
taxes
imposed
by
certain
countries
in
which
it
invests.
Foreign
income
taxes
are
accrued
by
the
Fund
as
a
reduction
of
income.
These
amounts
are
shown
as
withholding
tax
on
the
statement
of
operations.
Recent
Accounting
Pronouncements.
In
March
2020,
the
Financial
Accounting
Standards
Board
("FASB") issued
Accounting
Standards
Update
("ASU")
No.
2020-04
Reference
Rate
Reform
(Topic
848);
Facilitation
of
the
Effects
of
Reference
Rate
Reform
on
Financial
Reporting, 
which
provides
optional
guidance
for
a
limited
period
of
time
to
ease
the
potential
burden
in
accounting
for
(or
recognizing
the
effects
of)
reference
rate
reform.
The
guidance
is
applicable
to
contracts
referencing
London
Interbank
Offered
Rate
(“LIBOR”)
or
another
reference
rate
that
is
expected
to
be
discontinued
due
to
reference
rate
reform.
The
ASU
is
effective
as
of
March
12,
2020
and
generally
can
be
applied
through
December
31,
2022.
Management
is
evaluating
the
underlying
securities
referencing
LIBOR
or
another
reference
rate
that
is
expected
to
be
discontinued
as
a
reference
rate
over
the
period
of
time
the
ASU
is
effective.  
3.
Operating
Policies
Cross
Trades.
The
Fund
may
engage
in
cross
trades.
A
cross
trade
is
a
purchase
or
sale
transaction
between
affiliated
portfolios
executed
directly
or
through
an
intermediary.
Entities
may
be
considered
affiliated
if
they
have
a
common
investment
advisor,
so
a
fund
may
be
considered
affiliated
with
any
portfolio
for
which
the
Fund's
sub-advisor
acts
as
an
investment
advisor.
Such
transactions
are
permissible
provided
that
the
conditions
of
Rule
17a-7
under
the
Investment
Company
Act
of
1940
are
satisfied.
For
the
period
 ended
September
30,
2020
,
the
Fund
did
not
have
material
cross
trades.
Foreign
Currency
Contracts.
The
Fund
may
be
subject
to
foreign
currency
exchange
rate
risk
in
the
normal
course
of
pursuing
the
Fund's
investment
objectives.
The
Fund
may
use
foreign
currency
contracts
to
gain
exposure
to,
or
hedge
against
changes
in
the
value
of
foreign
currencies. The
Fund enters
into
forward
contracts
to
purchase
and
sell
foreign
currencies
at
a
specified
future
date
at
a
fixed
exchange
rate.
Forward
foreign
currency
contracts
are
valued
at
the
forward
rate,
and
are
marked-to-market
daily.
The
change
in
fair
value
is
recorded
by
the
Fund
as
an
unrealized
gain
or
loss.
When
the
contract
is
closed,
the
Fund
records
a
realized
gain
or
loss
equal
to
the
difference
between
the
value
of
the
contract
at
the
time
it
was
opened
and
the
value
at
the
time
it
was
closed.
The
use
of
forward
foreign
currency
contracts
does
not
eliminate
the
fluctuations
in
underlying
prices
of
the
Fund's
portfolio
securities,
but
it
does
establish
a
rate
of
exchange
that
can
be
achieved
in
the
future.
Although
forward
foreign
currency
contracts
limit
the
risk
of
loss
due
to
a
decline
in
the
value
of
the
hedged
currency,
they
also
limit
any
potential
gain
that
might
result
should
the
value
of
the
currency
increase.
In
addition,
the
Fund
could
be
exposed
to
risks
if
the
counterparties
to
the
contracts
are
unable
to
meet
the
terms
of
their
contracts
or
if
the
value
of
the
currency
changes
unfavorably
to
the
U.S.
dollar
or
other
respective
currency. 
Illiquid
Securities.
Illiquid
securities
generally
cannot
be
sold
or
disposed
of
in
the
ordinary
course
of
business
(within
seven
calendar
days)
at
approximately
the
value
at
which
the
Fund
has
valued
the
investments.
This
may
have
an
adverse
effect
on
the
Fund’s
ability
to
dispose
of
particular
illiquid
securities
at
fair
value
and
may
limit
the
Fund’s
ability
to
obtain
accurate
market
quotations
for
purposes
of
valuing
the
securities. 
2.
Significant
Accounting
Policies
(continued)
Notes
to
Financial
Statements
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
8
Indemnification.
Under
the
Fund’s
by-laws,
present
and
past
officers,
trustees
and
employees
are
indemnified
against
certain
liabilities
arising
out
of
the
performance
of
their
duties.
In
addition,
in
the
normal
course
of
business,
the
Fund
may
enter
into
a
variety
of
contracts
that
may
contain
representations
and
warranties
which
provide
general
indemnifications.
The
Fund’s
maximum
exposure
under
these
arrangements
is
unknown,
as
this
would
involve
future
claims
that
may
be
made
against
the
Fund.
Restricted
Securities.
The
Fund
may
invest
in
securities
that
are
subject
to
legal
or
contractual
restrictions
on
resale.
These
securities
generally
may
be
resold
in
transactions
exempt
from
registration
or
to
the
public
if
the
securities
are
registered.
Disposal
of
these
securities
may
involve
time-consuming
negotiations
and
expense,
and
prompt
sale
at
an
acceptable
price
may
be
difficult. 
Senior
Floating
Rate
Interests.
The
Fund
may
invest
in
senior
floating
rate
interests
(bank
loans).
Senior
floating
rate
interests
typically
hold
the
most
senior
position
in
the
capital
structure
of
a
business
entity
(the
“Borrower”),
are
secured
by
specific
collateral
and
have
a
claim
on
the
assets
and/or
stock
of
the
Borrower
that
is
senior
to
that
held
by
subordinated
debtholders
and
stockholders
of
the
Borrower.
Senior
floating
rate
interests
are
typically
structured
and
administered
by
a
financial
institution
that
acts
as
the
agent
of
the
lenders
participating
in
the
senior
floating
rate
interest.
Borrowers
of
senior
floating
rate
interests
are
typically
rated
below-investment-grade,
which
means
they
are
more
likely
to
default
than
investment-grade
loans.
A
default
could
lead
to
non-payment
of
income
which
would
result
in
a
reduction
of
income
to
the
Fund
and
there
can
be
no
assurance
that
the
liquidation
of
any
collateral
would
satisfy
the
Borrower’s
obligation
in
the
event
of
non-payment
of
scheduled
interest
or
principal
payments,
or
that
such
collateral
could
be
readily
liquidated.
Senior
floating
rate
interests
pay
interest
at
rates
which
are
periodically
reset
by
reference
to
a
base
lending
rate
plus
a
spread.
These
base
lending
rates
are
generally
the
prime
rate
offered
by
a
designated
U.S.
bank
or
the
London
Interbank
Offered
Rate
(“LIBOR”).
Senior
floating
rate
interests
generally
are
subject
to
mandatory
and/or
optional
prepayment.
Because
of
these
mandatory
prepayment
conditions
and
because
there
may
be
significant
economic
incentives
for
the
Borrower
to
repay,
prepayments
of
senior
floating
rate
interests
may
occur.
As
a
result,
the
actual
remaining
maturity
of
senior
floating
rate
interests
may
be
substantially
less
than
stated
maturities
shown
in
the
schedule
of
investments.
Unfunded
Commitments.
In
connection
with
the
senior
floating
rate
interests,
the
Fund
may
enter
into
unfunded
loan
commitments
(“commitments”).
All
or
a
portion
of
the
commitments
may
be
unfunded.
The
Fund
is
obligated
to
fund
these
commitments
at
the
Borrower’s
discretion.
Therefore,
the
Fund
must
have
funds
sufficient
to
cover
its
contractual
obligation.
Commitments
are
marked
to
market
daily
and
the
unrealized
gain
or
loss
is
shown
as
a
separate
line
item
called
unrealized
gain
or
loss
on
commitments
on
the
statement
of
assets
and
liabilities
and
included
in
the
net
change
in
unrealized
appreciation/(depreciation)
of
investments
on
the
statement
of
operations,
as
applicable.
As
of
September
30,
2020,
the
Fund
had
no
commitments
relating
to
senior
floating
rate
interests.
The
Fund
may
also
enter
into
unfunded
commitments
relating
to
potential
future
investments
in
private
investment
funds.
As
of
September
30,
2020,
the
Fund
had
unfunded
commitments
relating
to
potential
future
investments
not
currently
held,
as
reported
below
(amounts
in
thousands):
4.
Fair
Valuation
Fair
value
is
defined
as
the
price
that
the
Fund
would
receive
upon
selling
a
security
in
a
timely
transaction
to
an
independent
buyer
in
the
principal
or
most
advantageous
market
of
the
security
at
the
measurement
date.
In
determining
fair
value,
the
Fund
may
use
one
or
more
of
the
following
approaches:
market,
income
and/or
cost.
A
hierarchy
for
inputs
is
used
in
measuring
fair
value
that
maximizes
the
use
of
observable
inputs
and
minimizes
the
use
of
unobservable
inputs
by
requiring
that
the
most
observable
inputs
be
used
when
available.
Observable
inputs
are
inputs
that
reflect
the
assumptions
market
participants
would
use
in
pricing
the
asset
or
liability
developed
based
on
market
data
obtained
from
sources
independent
of
the
Fund.
Unobservable
inputs
are
inputs
that
reflect
the
Fund’s
own
estimates
about
the
Private
Investment
Fund
Unfunded
Commitment
Agrivest
Farmland
Fund
Brookfield
Senior
Mezzanine
Real
Estate
Finance
Fund
Brookfield
Super-Core
Infrastructure
Partners
Fund
CBRE
Caledon
Global
Infrastructure
Fund
Hancock
Timberland
and
Farmland
Fund
$6,000
5,000
5,000
6,000
11,880
3.
Operating
Policies
(continued)
Notes
to
Financial
Statements
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
9
estimates
market
participants
would
use
in
pricing
the
asset
or
liability
developed
based
on
the
best
information
available
in
the
circumstances.
The
three-tier
hierarchy
of
inputs
is
summarized
in
the
three
broad
levels
listed
below.
Level
1
–
Quoted
prices
are
available
in
active
markets
for
identical
securities
as
of
the
reporting
date.
Investments
which
are
generally
included
in
this
category
include
listed
equities
and
listed
derivatives.
Level
2
–
Other
significant
observable
inputs
(including
quoted
prices
for
similar
investments,
interest
rates,
prepayments
speeds,
credit
risk,
etc.).
Investments
which
are
generally
included
in
this
category
include
certain
foreign
equities,
corporate
bonds,
senior
floating
rate
interests,
municipal
bonds,
and
US
Government
and
Government
Agency
Obligations.
Level
3
–
Significant
unobservable
inputs
(including
the
Fund’s
assumptions
in
determining
the
fair
value
of
investments).
Investments
which
are
generally
included
in
this
category
include
certain
common
stocks,
corporate
bonds,
mortgage
backed
securities
or
senior
floating
rate
interests.
In
accordance
with
Accounting
Standards
Codification
820
–
Fair
Value
Measurement
,
the
Fund
has
elected
to
apply
the
practical
expedient
to
value
its
investments
in
private
investment
funds
at
their
respective
net
asset
value
each
calendar
quarter.
These
investments
are
excluded
from
the
fair
value
hierarchy.
The
availability
of
observable
inputs
can
vary
from
security
to
security
and
is
affected
by
a
wide
variety
of
factors,
including,
for
example,
the
type
of
security,
whether
the
security
is
new
and
not
yet
established
in
the
market
place,
and
other
characteristics
particular
to
the
transaction.
To
the
extent
that
valuation
is
based
on
models
or
inputs
that
are
less
observable
or
unobservable
in
the
market,
the
determination
of
fair
value
requires
more
judgment.
Accordingly,
the
degree
of
judgment
exercised
by
the
Fund
in
determining
fair
value
is
greatest
for
instruments
categorized
in
Level
3.
In
certain
cases,
the
inputs
used
to
measure
fair
value
may
fall
into
different
levels
of
the
fair
value
hierarchy.
In
such
cases,
for
disclosure
purposes,
the
level
in
the
fair
value
hierarchy
within
which
the
fair
value
measurement
in
its
entirety
falls
is
determined
based
on
the
lowest
level
input
that
is
significant
to
the
fair
value
measurement
in
its
entirety.
Fair
value
is
a
market-based
measure
considered
from
the
perspective
of
a
market
participant
who
holds
the
asset
rather
than
an
entity
specific
measure.
Therefore,
even
when
market
assumptions
are
not
readily
available,
the
Fund’s
own
assumptions
are
set
to
reflect
those
that
market
participants
would
use
in
pricing
the
asset
or
liability
at
the
measurement
date.
The
Fund
uses
prices
and
inputs
that
are
current
as
of
the
measurement
date,
when
available.
Investments
which
are
included
in
the
Level
3
category
may
be
valued
using
quoted
prices
from
brokers
and
dealers
participating
in
the
market
for
these
investments.
These
investments
are
classified
as
Level
3
investments
due
to
the
lack
of
market
transparency
and
market
corroboration
to
support
these
quoted
prices.
Valuation
models
may
be
used
as
the
pricing
source
for
other
investments
classified
as
Level
3.
Valuation
models
rely
on
one
or
more
significant
unobservable
inputs
such
as
prepayment
rates,
probability
of
default,
or
loss
severity
in
the
event
of
default.
Significant
increases
in
any
of
those
inputs
in
isolation
would
result
in
a
significantly
lower
fair
value
measurement.
Benchmark
pricing
procedures
set
the
base
price
of
a
security
based
on
current
market
data.
The
base
price
may
be
a
broker-dealer
quote,
transaction
price,
or
internal
value
based
on
relevant
market
data.
The
fair
values
of
these
securities
are
dependent
on
economic,
political
and
other
considerations.
The
values
of
such
securities
may
be
affected
by
significant
changes
in
the
economic
conditions,
changes
in
government
policies,
and
other
factors
(e.g.,
natural
disasters,
pandemics,
accidents,
conflicts,
etc.).
The
following
is
a
summary
of
the
inputs
used
as
of
September
30,
2020
in
valuing
the
Fund’s
securities
carried
at
value
(amounts
in
thousands):
Fund
Level
1
-
Quoted
Prices
Level
2
-
Other
Significant
Observable
Inputs
Level
3
-
Significant
Unobservable
Inputs
Totals
(Level
1,2,3)
Principal
Diversified
Select
Real
Asset
Fund
Bonds*
$
—
$
33,503
$
—
$
33,503
Common
Stocks
Basic
Materials
2,744
2,991
—
5,735
Communications
40
92
—
132
Consumer,
Cyclical
111
211
—
322
4.
Fair
Valuation
(continued)
Notes
to
Financial
Statements
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
10
*For
additional
detail
regarding
sector
classifications,
please
see
the
schedule
of
investments.
Certain
detailed
information
is
provided
for
those
Funds
with
significant
investments
in
Level
3
securities.
Quantitative
information
about
the
significant
unobservable
inputs
used
in
the
fair
value
measurements
categorized
within
Level
3
of
the
fair
value
hierarchy
is
as
follows
(amounts
in
thousands):
The
changes
in
investments
measured
at
fair
value
for
which
Level
3
inputs
have
been
used
to
determine
fair
value
are
as
follows
(amounts
in
thousands):
*Securities
are
transferred
into
Level
3
for
a
variety
of
reasons
including,
but
not
limited
to:
1.
Securities
where
trading
has
been
halted
2.
Securities
that
have
certain
restrictions
on
trading
3.
Instances
in
which
a
security
is
not
priced
by
a
pricing
service
**Securities
are
transferred
out
of
Level
3
for
a
variety
of
reasons
including,
but
not
limited
to:
1.
Securities
where
trading
resumes
2.
Securities
where
trading
restrictions
have
expired
3.
Instances
in
which
a
price
becomes
available
from
a
pricing
service
Fund
Level
1
-
Quoted
Prices
Level
2
-
Other
Significant
Observable
Inputs
Level
3
-
Significant
Unobservable
Inputs
Totals
(Level
1,2,3)
Principal
Diversified
Select
Real
Asset
Fund
Consumer,
Non-cyclical
$
1,728
$
2,226
$
—
$
3,954
Energy
7,994
3,579
—
11,573
Financial
8,091
5,585
—
13,676
Industrial
5,588
2,016
—
7,604
Utilities
11,236
13,777
—
25,013
Convertible
Bonds*
—
—
4,312
4,312
Convertible
Preferred
Stocks
Energy
—
—
1,890
1,890
Financial
42
—
—
42
Investment
Companies
8,542
—
—
8,542
Preferred
Stocks
Utilities
564
—
—
564
Senior
Floating
Rate
Interests*
—
502
—
502
Total
$
46,680
$
64,482
$
6,202
$
117,364
Investments
Using
NAV
as
practical
expedient
Private
Investment
Funds
23,381
Total
investments
in
securities
$
—
$
—
$
—
$
140,745
Fund
Asset
Type
Fair
Value
as
of
September
30,
2020
Valuation
Technique
Unobservable
Input
Input
Valuations
Diversified
Select
Real
Asset
Fund
Convertible
Bonds
$
4,312
Lattice
model
Debt
discount
rate
23.86%
Preferred
Stocks
1,890
Lattice
model
Debt
discount
rate
8.72%
$
6,202
Fair
Value
March
31,
2020
Realized
Gain/
(Loss)
Accrued
Discounts/
Premiums
and
Change
in
Unrealized
Gain/
(Loss)
Purchases
Proceeds
from
Sales
Transfers
into
Level
3*
Transfers
Out
of
Level
3**
Fair
Value
September
30,
2020
Net
Change
in
Unrealized
Appreciation/
(Depreciation)
on
Investments
held
at
September
30,
2020
Diversified
Select
Real
Asset
Fund
Convertible
Bonds
$
—
$
—
$
2,535
$
1,777
$
—
$
—
$
—
$
4,312
$
2,535
Preferred
Stocks
—
—
642
—
—
1,248
—
1,890
642
Total
$
—
$
—
$
3,177
$
1,777
$
—
$
1,248
$
—
$
6,202
$
3,177
4.
Fair
Valuation
(continued)
Notes
to
Financial
Statements
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
11
5.
Management
Agreement
and
Transactions
with
Affiliates
Management
Services.
The
Fund
has
agreed
to
pay
investment
advisory
and
management
fees
to
the
Manager
computed
at
an
annual
percentage
rate
of
the
Fund’s
average
daily
net
assets.
A
portion
of
the
management
fee
is
paid
by
the
Manager
to
the
sub-advisors
of
the
Fund,
which
may
be
affiliates
of
the
Manager.
The
annual
rate
paid
by
the
Fund
is
based
upon
the
aggregate
average
daily
net
assets
(“aggregate
net
assets”)
of
the
Fund.
The
investment
advisory
and
management
fee
schedule
for
the
Fund
is
1.70%
of
aggregate
net
assets
up
to
$1.5
billion
and
1.65%
of
aggregate
net
assets
over
$1.5
billion.
The
Manager
has
contractually
agreed
to
waive
0.53%
of
the
Fund’s
investment
advisory
and
management
fees.
It
is
expected
that
the
fee
waiver
will
continue
through
the
period
ending
July
31,
2021;
however,
the
Fund
and
the
Manager,
the
parties
to
the
agreement,
may
mutually
agree
to
terminate
the
fee
waiver
prior
to
the
end
of
the
period.
The
Manager
has
contractually
agreed
to
limit
the
Fund’s
expenses
(excluding
interest
expense,
expenses
related
to
fund
investments,
acquired
fund
fees
and
expenses,
and
other
extraordinary
expenses).
The
reductions
and
reimbursements
are
in
amounts
that
maintain
total
operating
expenses
at
or
below
certain
limits.
The
limits
are
expressed
as
a
percentage
of
average
daily
net
assets
attributable
to
each
class
of
shares
on
an
annualized
basis
during
the
reporting
period.
The
expenses
borne
by
the
Manager
are
subject
to
reimbursement
by
the
Fund
through
the
fiscal
year
end,
provided
no
reimbursement
will
be
made
if
it
would
result
in
the
Fund
exceeding
the
total
operating
expense
limits.
Any
amounts
outstanding
at
the
end
of
the
fiscal
year
are
shown
as
an
expense
reimbursement
from
Manager
or
expense
reimbursement
to
Manager
on
the
statement
of
assets
and
liabilities
and
are
settled
monthly.
It
is
expected
that
the
operating
expense
limits
will
continue
through
the
period
ending
July
31,
2021;
however,
the
Fund
and
the
Manager,
the
parties
to
the
agreement,
may
mutually
agree
to
terminate
the
operating
expense
limits
prior
to
the
end
of
the
period.
The
operating
expense
limits
are
as
follows:
Distribution
Fees.
The
Class
A
shares
of
the
Fund
bear
distribution
fees.
The
fees
are
computed
at
an
annual
rate
of
0.25%
of
the
average
daily
net
assets
attributable
to
Class
A
shares
of
the
Fund.
Distribution
fees
are
paid
to
the
Distributor
of
the
Fund.
A
portion
of
the
distribution
fees
may
be
paid
to
other
selling
dealers
for
providing
certain
services.
For
the
period
ending
September
30,
2020,
the
Fund's
distribution
fees
were
less
than
$500.
Chief
Compliance
Officer
Expenses.
The
Fund
pays
certain
expenses
associated
with
the
Chief
Compliance
Officer
(“CCO”).
This
expense
is
allocated
among
the
registered
investment
companies
managed
by
the
Manager
based
on
the
relative
net
assets
of
each
fund
and
is
shown
on
the
statement
of
operations.
For
the
period
ending
September
30,
2020,
the
Fund’s
CCO
expenses
were
less
than
$500.
Sales
Charges.
The
Distributor
retains
sales
charges
on
certain
sales
of
Class
A
shares
based
on
declining
rates
which
begin
at
5.75%.
For
the
period
ended
September
30,
2020,
there
were
no
sales
charges
retained
by
the
Distributor.
Affiliated
Ownership
.
As
of
September
30,
2020,
Principal
Financial
Services
Inc.
and
Principal
Life
Insurance
Company
(each
an
affiliate
of
the
Manager)
owned
shares
of
the
Fund
as
follows
(amounts
of
shares
in
thousands):
6.
Investment
Transactions
For
the
period
ended
September
30,
2020,
the
cost
of
investment
securities
purchased
and
proceeds
from
investment
securities
sold
(not
including
short-term
investments,
return
of
capital,
and
mergers)
by
the
Fund
were
as
follows
(amounts
in
thousands):
Share
Class
Operating
Expense
Limit
Expiration
Class
A
1.67%
July
31,
2021
Class
Y
1.17%
July
31,
2021
Institutional
Class
1.37%
July
31,
2021
Class
A
Class
Y
Institutional
Principal
Diversified
Select
Real
Asset
Fund
10
6,063
10
Purchases
Sales
Principal
Diversified
Select
Real
Asset
Fund
$
46,045
$
27,439
Notes
to
Financial
Statements
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
12
7.
Repurchase
Offers
The
Fund
has
a
fundamental
policy
to
make
quarterly
repurchase
offers
for
no
less
than
5%
and
not
more
than
25%
of
its
shares
at
a
price
equal
to
net
asset
value
per
share,
unless
suspended
or
postponed
in
accordance
with
regulatory
requirements,
and
that
each
quarterly
repurchase
pricing
share
occur
on
the
Repurchase
Pricing
Date,
the
date
that
will
be
used
to
determine
the
Fund’s
net
asset
value
per
share
applicable
to
the
repurchase.
The
Fund
will
make
quarterly
repurchase
offers
every
three
months,
in
the
following
months:
March,
June,
September,
and
December.
The
Fund
will
repurchase
shares
that
are
tendered
by
a
specific
date
(the
“Repurchase
Request
Deadline”),
which
will
be
established
by
the
Board
in
accordance
with
Rule
23c-3,
as
amended
from
time
to
time.
Rule
23c-3
requires
the
Repurchase
Request
Deadline
to
be
no
less
than
21
and
no
more
than
42
days
after
the
Fund
sends
notification
to
shareholders
of
the
repurchase
offer.
There
will
be
a
maximum
14
calendar
day
period,
or
the
next
business
day
if
the
14th
calendar
day
is
not
a
business
day,
between
the
Repurchase
Request
Deadline
and
the
Repurchase
Pricing
Date.
If
a
repurchase
offer
by
the
Fund
is
oversubscribed,
the
Fund
may
repurchase,
but
is
not
required
to
repurchase,
additional
shares
up
to
a
maximum
amount
of
2%
of
the
outstanding
shares
of
the
Fund.
If
the
Fund
determines
not
to
repurchase
additional
shares
beyond
the
repurchase
offer
amount,
or
if
shareholders
tender
an
amount
of
shares
greater
than
that
which
the
Fund
is
entitled
to
repurchase,
the
Fund
will
repurchase
the
shares
tendered
on
a
pro
rata
basis.
For
the
period
from
April
1,
2020
through
September
30,
2020,
no
shares
of
the
Fund
were
repurchased
during
the
repurchase
offer
windows.
8.
Federal
Tax
Information
Distributions
to
Shareholders.
The
federal
income
tax
character
of
distributions
paid
for
the
periods
ended
September
30,
2020
and
March
31,
2020,
were
as
follows
(amounts
in
thousands):
Distributable
Earnings.
As
of
March
31,
2020
,
the
components
of
distributable
earnings
(accumulated
loss)
on
a
federal
tax
basis
were
as
follows
(amounts
in
thousands):
Capital
Loss
Carryforwards.
For
federal
income
tax
purposes,
capital
loss
carryforwards
are
losses
that
can
be
used
to
offset
future
capital
gains
of
the
Fund.
As
of
March
31,
2020
,
the
Fund
had
approximate
net
capital
loss
carryforwards
as
follows
(amounts
in
thousands):
Capital
losses
will
be
carried
forward
with
no
expiration
and
with
the
character
of
the
loss
retained.
For
the
period
from
June
25,
2019,
date
operations
commenced,
through
March
31,
2020
,
the
Fund
did
not
utilize
any
capital
loss
carryforwards.
Late-Year
Losses.
A
regulated
investment
company
may
elect
to
treat
any
portion
of
its
qualified
late-year
loss
as
arising
on
the
first
day
of
the
next
taxable
year.
Qualified
late-year
losses
are
certain
capital
and
ordinary
losses
which
occur
during
the
portion
of
the
fund’s
taxable
year
subsequent
to
October
31
and
December
31,
respectively.
For
the
taxable
period
from
June
25,
2019,
date
operations
commenced,
through
March
31,
2020
,
the
Fund
does
not
plan
to
defer
any
late-year
losses.
Reclassification
of
Capital
Accounts.
The
Fund
may
record
reclassifications
in
its
capital
accounts.
These
reclassifications
have
no
impact
on
the
total
net
assets
of
the
Fund.
The
reclassifications
are
a
result
of
permanent
differences
between
U.S.
GAAP
and
tax
accounting.
Adjustments
are
made
to
reflect
the
impact
these
items
have
on
current
and
future
distributions
to
shareholders.
Therefore,
the
source
of
the
Fund’s
distributions
may
be
shown
in
the
accompanying
statement
of
changes
in
net
assets
as
from
net
investment
income
and
net
realized
Ordinary
Income
Return
of
Capital
September
30,
2020
March
31,
2020
September
30,
2020
March
31,
2020
Principal
Diversified
Select
Real
Asset
Fund
$
2,138
$
1,974
$
—
$
238
Accumulated
Losses
Net
Unrealized
Appreciation
(Depreciation)
Total
Accumulated
Earnings
(Deficit)
Principal
Diversified
Select
Real
Asset
Fund
$
(580)
$
(27,498)
$
(28,078)
Short-Term
Long-Term
Total
Principal
Diversified
Select
Real
Asset
Fund
$
580
$
—
$
580
Notes
to
Financial
Statements
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
13
gain
on
investments
or
from
tax
return
of
capital
depending
on
the
type
of
book
and
tax
differences
that
exist.
For
the
period
from
June
25,
2019,
date
operations
commenced,
through
March
31,
2020,
the
Fund
recorded
reclassifications
as
follows
(amounts
in
thousands):
Federal
Income
Tax
Basis.
As
of
September
30,
2020
,
the
net
federal
income
tax
unrealized
appreciation
(depreciation)
and
federal
tax
cost
of
investments
held
by
the
Fund
were
as
follows
(amounts
in
thousands):
9.
Other
Matters
As
of
the
date
these
financial
statements
were
available
to
be
issued,
the
outbreak
of
the
novel
coronavirus
(“COVID-19”)
in
many
countries
continues
to
adversely
impact
global
commercial
activity
and
has
contributed
to
significant
volatility
in
financial
markets.
The
global
impact
of
the
outbreak
has
been
rapidly
evolving
and
many
countries
have
reacted
by
instituting
quarantines
and
restriction
on
travel.
Such
measures,
as
well
as
the
general
uncertainty
surrounding
the
dangers
and
impact
of
COVID-19,
are
creating
significant
disruption
in
supply
chains
and
economic
activity.
As
COVID-19
continues
to
spread,
the
potential
impacts,
including
a
global,
regional
or
other
economic
recession,
are
increasingly
difficult
to
assess.
These
events,
or
fear
of
such
an
event,
present
material
uncertainty
and
risk
with
respect
to
the
Fund’s
performance
and
financial
results.
10.
Subsequent
Events
Management
has
evaluated
events
and
transactions
that
have
occurred
through
the
date
the
financial
statements
were
issued
that
would
merit
recognition
or
disclosure
in
the
financial
statements.
There
were
no
items
requiring
adjustment
of
the
financial
statements
or
additional
disclosure.
Total
Distributable
Earnings
(Accumulated
Loss)
Capital
Shares
and
Additional
Paid-in-Capital
Principal
Diversified
Select
Real
Asset
Fund
$
1
$
(
1
)
Unrealized
Appreciation
Unrealized
(Depreciation)
Net
Unrealized
Appreciation/
(Depreciation)
Cost
for
Federal
Income
Tax
Purposes
Principal
Diversified
Select
Real
Asset
Fund
$
10,102
$
(12,445)
$
(2,343)
$
143,088
8.
Federal
Tax
Information
(continued)
Schedule
of
Investments
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
See
accompanying
notes.
14
INVESTMENT
COMPANIES
-
6.05%
Shares
Held
Value
(000's)
Exchange-Traded
Funds
-
0.18%
SPDR
S&P
Global
Natural
Resources
ETF
6,579‌
$
248‌
Money
Market
Funds
-
5.87%
Morgan
Stanley
Institutional
Liquidity
Funds
-
Government
Portfolio
-
Institutional
Class
0.02%
(a)
8,294,422‌
8,294‌
TOTAL
INVESTMENT
COMPANIES
$
8,542‌
PRIVATE
INVESTMENT
FUNDS
-
16.56%
Shares/Units
Held
Value
(000's)
Agriculture
-
4.98%
Ceres
Farmland
Holdings,
LP
(b)
6,000,000‌
$
6,224‌
UBS
AgriVest
Farmland
Fund,
LP
(b)
400‌
809‌
$
7,033‌
Diversified
Financial
Services
-
2.16%
Sound
Point
CLO
Fund,
LP
(b)
N/A‌
3,044‌
Forest
Products
&
Paper
-
5.81%
BTG
Pactual
Open
Ended
Core
US
Timberland
Fund,
LP
(b)
6,905‌
8,081‌
Hancock
Timberland
and
Farmland
Fund,
LP
(b)
117‌
120‌
$
8,201‌
Real
Estate
-
3.61%
UBS
Trumbull
Property
Growth
&
Income
Fund,
LP
(b)
200‌
5,103‌
TOTAL
PRIVATE
INVESTMENT
FUNDS
$
23,381‌
COMMON
STOCKS
-
48.16%
Shares
Held
Value
(000's)
Agriculture
-
0.18%
Archer-Daniels-Midland
Co
2,728‌
$
127‌
Bunge
Ltd
2,677‌
122‌
$
249‌
Biotechnology
-
0.09%
Corteva
Inc
4,278‌
123‌
Building
Materials
-
0.32%
Fortune
Brands
Home
&
Security
Inc
1,396‌
121‌
Geberit
AG
366‌
217‌
Masco
Corp
2,023‌
111‌
$
449‌
Chemicals
-
0.86%
CF
Industries
Holdings
Inc
3,743‌
115‌
Ecolab
Inc
1,877‌
375‌
FMC
Corp
1,144‌
121‌
ICL
Group
Ltd
32,780‌
116‌
Mosaic
Co/The
6,701‌
122‌
Nutrien
Ltd
3,294‌
129‌
Sociedad
Quimica
y
Minera
de
Chile
SA
ADR
3,895‌
126‌
Yara
International
ASA
2,896‌
112‌
$
1,216‌
Commercial
Services
-
1.49%
Atlas
Arteria
Ltd
194,816‌
856‌
Transurban
Group
122,066‌
1,246‌
$
2,102‌
Consumer
Products
-
0.10%
Avery
Dennison
Corp
1,059‌
135‌
Electric
-
11.54%
AusNet
Services
791,770‌
1,069‌
Brookfield
Renewable
Corp
25,987‌
1,523‌
Clearway
Energy
Inc
-
Class
C
54,027‌
1,457‌
Dominion
Energy
Inc
3,488‌
275‌
Duke
Energy
Corp
13,018‌
1,153‌
Edison
International
13,232‌
673‌
EDP
-
Energias
de
Portugal
SA
229,558‌
1,129‌
Emera
Inc
25,702‌
1,056‌
National
Grid
PLC
68,105‌
782‌
Public
Service
Enterprise
Group
Inc
19,523‌
1,072‌
Red
Electrica
Corp
SA
87,944‌
1,649‌
Southern
Co/The
16,990‌
921‌
Spark
Infrastructure
Group
729,230‌
1,071‌
SSE
PLC
50,681‌
789‌
Terna
Rete
Elettrica
Nazionale
SpA
124,301‌
870‌
COMMON
STOCKS
(continued)
Shares
Held
Value
(000’s)
Electric
(continued)
Transmissora
Alianca
de
Energia
Eletrica
SA
160,500‌
$
801‌
$
16,290‌
Electronics
-
0.34%
Badger
Meter
Inc
3,666‌
240‌
Watts
Water
Technologies
Inc
2,429‌
243‌
$
483‌
Energy
-
Alternate
Sources
-
1.90%
Enviva
Partners
LP
(c),(d),(e)
30,769‌
1,239‌
NextEra
Energy
Partners
LP
24,136‌
1,447‌
$
2,686‌
Engineering
&
Construction
-
0.99%
AECOM
(c)
3,039‌
127‌
Aena
SME
SA
(c),(f)
1,785‌
248‌
Grupo
Aeroportuario
del
Pacifico
SAB
de
CV
45,200‌
363‌
Stantec
Inc
6,774‌
206‌
Sydney
Airport
105,757‌
449‌
$
1,393‌
Environmental
Control
-
1.80%
China
Water
Affairs
Group
Ltd
256,000‌
202‌
Evoqua
Water
Technologies
Corp
(c)
23,385‌
496‌
Kurita
Water
Industries
Ltd
11,600‌
384‌
METAWATER
Co
Ltd
11,800‌
258‌
Montrose
Environmental
Group
Inc
(c)
4,598‌
109‌
Pentair
PLC
10,486‌
480‌
Tetra
Tech
Inc
6,421‌
613‌
$
2,542‌
Food
-
0.17%
Ingredion
Inc
1,519‌
115‌
Wilmar
International
Ltd
38,100‌
124‌
$
239‌
Forest
Products
&
Paper
-
0.74%
International
Paper
Co
3,367‌
136‌
Mondi
PLC
6,244‌
132‌
Nine
Dragons
Paper
Holdings
Ltd
110,000‌
139‌
Oji
Holdings
Corp
27,000‌
124‌
Smurfit
Kappa
Group
PLC
3,441‌
135‌
Stora
Enso
Oyj
8,284‌
130‌
Svenska
Cellulosa
AB
SCA
(c)
9,454‌
130‌
UPM-
Kymmene
Oyj
4,020‌
122‌
$
1,048‌
Gas
-
2.00%
Enagas
SA
35,046‌
809‌
Italgas
SpA
102,919‌
649‌
Snam
SpA
264,583‌
1,361‌
$
2,819‌
Healthcare
-
Products
-
0.78%
Danaher
Corp
5,135‌
1,106‌
Home
Furnishings
-
0.12%
Coway
Co
Ltd
(c)
2,470‌
168‌
Housewares
-
0.08%
Scotts
Miracle-
Gro
Co/The
725‌
111‌
Internet
-
0.03%
21Vianet
Group
Inc
ADR
(c)
1,743‌
40‌
Iron
&
Steel
-
0.51%
ArcelorMittal
SA
(c)
9,634‌
128‌
Fortescue
Metals
Group
Ltd
9,482‌
111‌
Nippon
Steel
Corp
(c)
12,400‌
117‌
Nucor
Corp
2,686‌
121‌
POSCO
787‌
132‌
Vale
SA
ADR
11,105‌
117‌
$
726‌
Lodging
-
0.03%
City
Developments
Ltd
7,700‌
43‌
Schedule
of
Investments
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
See
accompanying
notes.
15
COMMON
STOCKS
(continued)
Shares
Held
Value
(000’s)
Machinery
-
Diversified
-
1.09%
IDEX
Corp
1,853‌
$
338‌
Mueller
Water
Products
Inc
-
Class
A
19,689‌
205‌
Xylem
Inc
/NY
11,868‌
998‌
$
1,541‌
Metal
Fabrication
&
Hardware
-
0.30%
Advanced
Drainage
Systems
Inc
6,789‌
424‌
Mining
-
1.94%
Agnico
Eagle
Mines
Ltd
1,481‌
118‌
Anglo
American
PLC
4,978‌
120‌
AngloGold
Ashanti
Ltd
ADR
4,138‌
109‌
Antofagasta
PLC
8,495‌
112‌
Barrick
Gold
Corp
4,119‌
116‌
BHP
Group
Ltd
4,357‌
113‌
Franco-Nevada
Corp
812‌
114‌
Freeport-McMoRan
Inc
7,825‌
122‌
Fresnillo
PLC
7,226‌
112‌
Glencore
PLC
(c)
53,926‌
112‌
Gold
Fields
Ltd
ADR
9,375‌
115‌
Kinross
Gold
Corp
13,744‌
121‌
Kirkland
Lake
Gold
Ltd
2,289‌
112‌
Korea
Zinc
Co
Ltd
365‌
118‌
MMC
Norilsk
Nickel
PJSC
ADR
4,689‌
113‌
Newcrest
Mining
Ltd
5,168‌
117‌
Newmont
Corp
1,815‌
115‌
Polymetal
International
PLC
4,498‌
98‌
Polyus
PJSC
993‌
105‌
Rio
Tinto
Ltd
1,687‌
115‌
South32
Ltd
78,654‌
117‌
Southern
Copper
Corp
2,539‌
115‌
Sumitomo
Metal
Mining
Co
Ltd
4,000‌
124‌
Wheaton
Precious
Metals
Corp
2,283‌
112‌
$
2,745‌
Oil
&
Gas
-
2.08%
BP
PLC
34,530‌
100‌
Canadian
Natural
Resources
Ltd
6,188‌
99‌
Chevron
Corp
1,456‌
105‌
CNOOC
Ltd
107,000‌
103‌
ConocoPhillips
3,223‌
106‌
Ecopetrol
SA
ADR
10,725‌
106‌
Eni
SpA
13,094‌
102‌
EOG
Resources
Inc
2,694‌
97‌
Equinor
ASA
7,487‌
106‌
Exxon
Mobil
Corp
3,058‌
105‌
Gazprom
PJSC
ADR
25,103‌
109‌
LUKOIL
PJSC
ADR
1,785‌
103‌
Marathon
Petroleum
Corp
3,444‌
101‌
Neste
Oyj
2,278‌
120‌
Novatek
PJSC
826‌
113‌
Occidental
Petroleum
Corp
9,588‌
96‌
Petroleo
Brasileiro
SA
ADR
14,951‌
106‌
Phillips
66
2,088‌
108‌
Pioneer
Natural
Resources
Co
1,176‌
101‌
Reliance
Industries
Ltd
(f)
2,109‌
128‌
Repsol
SA
15,424‌
104‌
Rosneft
Oil
Co
PJSC
24,045‌
118‌
Royal
Dutch
Shell
PLC
-
A
Shares
8,243‌
103‌
Suncor
Energy
Inc
7,604‌
93‌
Tatneft
PJSC
ADR
2,734‌
98‌
TOTAL
SE
3,086‌
106‌
Valero
Energy
Corp
2,322‌
101‌
Woodside
Petroleum
Ltd
8,436‌
107‌
$
2,944‌
Oil
&
Gas
Services
-
0.13%
Halliburton
Co
7,550‌
91‌
Schlumberger
NV
6,425‌
100‌
$
191‌
COMMON
STOCKS
(continued)
Shares
Held
Value
(000’s)
Packaging
&
Containers
-
0.55%
Amcor
PLC
11,045‌
$
122‌
DS
Smith
PLC
35,265‌
134‌
Packaging
Corp
of
America
1,207‌
132‌
Sealed
Air
Corp
3,108‌
120‌
SIG
Combibloc
Group
AG
(c)
6,200‌
124‌
Westrock
Co
4,027‌
140‌
$
772‌
Pipelines
-
4.07%
APA
Group
96,842‌
720‌
Cheniere
Energy
Inc
(c)
8,562‌
396‌
Enbridge
Inc
14,569‌
426‌
Enterprise
Products
Partners
LP
37,087‌
586‌
Equitrans
Midstream
Corp
20,203‌
171‌
Gibson
Energy
Inc
26,743‌
433‌
Hess
Midstream
LP
13,730‌
207‌
Kinder
Morgan
Inc
25,785‌
318‌
Magellan
Midstream
Partners
LP
10,311‌
353‌
MPLX
LP
27,006‌
425‌
Noble
Midstream
Partners
LP
48,304‌
353‌
ONEOK
Inc
8,357‌
217‌
Plains
All
American
Pipeline
LP
24,013‌
144‌
Williams
Cos
Inc
/The
51,058‌
1,003‌
$
5,752‌
Private
Equity
-
0.17%
Centuria
Capital
Group
148,230‌
239‌
Real
Estate
-
1.52%
Castellum
AB
4,881‌
111‌
Entra
ASA
(f)
5,078‌
71‌
ESR
Cayman
Ltd
(c),(f)
2,400‌
7‌
Fabege
AB
5,831‌
81‌
LEG
Immobilien
AG
1,274‌
182‌
Midea
Real
Estate
Holding
Ltd
(f)
21,200‌
51‌
Mitsubishi
Estate
Co
Ltd
14,300‌
217‌
Mitsui
Fudosan
Co
Ltd
6,900‌
120‌
New
World
Development
Co
Ltd
46,750‌
228‌
Sun
Hung
Kai
Properties
Ltd
15,000‌
193‌
Vonovia
SE
9,627‌
660‌
Wihlborgs
Fastigheter
AB
4,747‌
94‌
Zhongliang
Holdings
Group
Co
Ltd
203,000‌
132‌
$
2,147‌
REITs
-
8.00%
AIMS
APAC
REIT
65,200‌
58‌
Alexandria
Real
Estate
Equities
Inc
413‌
66‌
American
Campus
Communities
Inc
1,040‌
36‌
American
Homes
4
Rent
7,287‌
208‌
American
Tower
Corp
421‌
102‌
Apartment
Investment
and
Management
Co
2,674‌
90‌
Arena
REIT
72,239‌
141‌
AvalonBay
Communities
Inc
580‌
87‌
Big
Yellow
Group
PLC
15,809‌
212‌
Broadstone
Net
Lease
Inc
4,533‌
76‌
Camden
Property
Trust
1,000‌
89‌
Centuria
Industrial
REIT
33,365‌
75‌
Centuria
Office
REIT
32,976‌
48‌
CFE
Capital
S
de
RL
de
CV
526,500‌
611‌
CoreSite
Realty
Corp
1,608‌
191‌
CRE
Logistics
REIT
Inc
(c)
35‌
52‌
Crown
Castle
International
Corp
4,883‌
813‌
CubeSmart
7,103‌
230‌
CyrusOne
Inc
1,804‌
126‌
Daiwa
Office
Investment
Corp
15‌
86‌
Dexus
13,775‌
88‌
Dream
Industrial
Real
Estate
Investment
Trust
29,600‌
251‌
Equinix
Inc
309‌
235‌
Essential
Properties
Realty
Trust
Inc
5,145‌
94‌
Essex
Property
Trust
Inc
246‌
49‌
Gecina
SA
1,139‌
150‌
Goodman
Group
14,508‌
188‌
Healthcare
Trust
of
America
Inc
7,253‌
189‌
Schedule
of
Investments
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
See
accompanying
notes.
16
COMMON
STOCKS
(continued)
Shares
Held
Value
(000’s)
REITs
(continued)
Healthpeak
Properties
Inc
6,606‌
$
179‌
Independence
Realty
Trust
Inc
24,316‌
282‌
Industrial
&
Infrastructure
Fund
Investment
Corp
68‌
117‌
Industrial
Logistics
Properties
Trust
10,761‌
235‌
Ingenia
Communities
Group
46,361‌
153‌
Inmobiliaria
Colonial
Socimi
SA
9,731‌
80‌
Investec
Australia
Property
Fund
26,578‌
25‌
Invitation
Homes
Inc
15,123‌
423‌
Japan
Hotel
REIT
Investment
Corp
211‌
104‌
Lendlease
Global
Commercial
REIT
41,300‌
21‌
Link
REIT
23,100‌
189‌
Merlin
Properties
Socimi
SA
12,739‌
106‌
MGM
Growth
Properties
LLC
3,391‌
95‌
Minto
Apartment
Real
Estate
Investment
Trust
4,200‌
58‌
NewRiver
REIT
PLC
33,633‌
21‌
Nippon
Prologis
REIT
Inc
(c)
30‌
101‌
Nomura
Real
Estate
Master
Fund
Inc
100‌
125‌
NSI
NV
4,036‌
142‌
Park
Hotels
&
Resorts
Inc
6,593‌
66‌
Plymouth
Industrial
REIT
Inc
5,614‌
69‌
Prologis
Inc
8,107‌
816‌
Rayonier
Inc
4,171‌
110‌
Rexford
Industrial
Realty
Inc
2,355‌
108‌
Sabana
Shari'ah
Compliant
Industrial
Real
Estate
Investment
Trust
220,000‌
59‌
Sabra
Health
Care
REIT
Inc
5,414‌
75‌
Segro
PLC
32,317‌
388‌
Sekisui
House
Reit
Inc
246‌
182‌
Simon
Property
Group
Inc
271‌
18‌
STORE
Capital
Corp
7,295‌
200‌
Summit
Industrial
Income
REIT
22,930‌
221‌
Sun
Communities
Inc
1,857‌
261‌
Sunstone
Hotel
Investors
Inc
4,860‌
39‌
Taubman
Centers
Inc
614‌
20‌
Terreno
Realty
Corp
1,300‌
71‌
UNITE
Group
PLC/The
7,492‌
81‌
United
Urban
Investment
Corp
157‌
175‌
Ventas
Inc
3,172‌
133‌
VICI
Properties
Inc
8,201‌
192‌
Vicinity
Centres
32,220‌
32‌
Welltower
Inc
6,543‌
360‌
Weyerhaeuser
Co
7,512‌
214‌
WPT
Industrial
Real
Estate
Investment
Trust
23,821‌
303‌
$
11,290‌
Telecommunications
-
0.06%
Eutelsat
Communications
SA
9,433‌
92‌
Water
-
4.18%
Aguas
Andinas
SA
2,357,856‌
661‌
American
Water
Works
Co
Inc
8,842‌
1,281‌
Essential
Utilities
Inc
19,628‌
790‌
Guangdong
Investment
Ltd
180,000‌
286‌
Middlesex
Water
Co
1,438‌
89‌
Pennon
Group
PLC
23,599‌
314‌
Severn
Trent
PLC
19,739‌
622‌
Suez
SA
31,010‌
573‌
United
Utilities
Group
PLC
50,446‌
557‌
Veolia
Environnement
SA
27,136‌
586‌
York
Water
Co/The
3,441‌
145‌
$
5,904‌
TOTAL
COMMON
STOCKS
$
68,009‌
CONVERTIBLE
PREFERRED
STOCKS
-
1.37%
Shares
Held
Value
(000's)
Pipelines
-
1.34%
Targa
Resources
Corp
9.50%,
02/18/2021
(d),(e),(g),(h)
2,000‌
$
1,890‌
REITs
-
0.03%
RPT
Realty
7.25%
(g)
1,037‌
42‌
TOTAL
CONVERTIBLE
PREFERRED
STOCKS
$
1,932‌
PREFERRED
STOCKS
-
0.40%
Shares
Held
Value
(000's)
Electric
-
0.40%
Cia
de
Transmissao
de
Energia
Eletrica
Paulista
0.15%
145,300‌
$
564‌
TOTAL
PREFERRED
STOCKS
$
564‌
BONDS
-
23.73%
Principal
Amount
(000's)
Value
(000's)
Commercial
Mortgage
Backed
Securities
-
17.43%
Banc
of
America
Commercial
Mortgage
Trust
2015-UBS7
3.17%,
09/15/2048
$
1,000‌
$
676‌
BANK
2018-BNK13
3.00%,
08/15/2061
(f)
2,000‌
1,424‌
BANK
2018-BNK15
4.81%,
11/15/2061
(
i
)
1,100‌
1,114‌
BANK
2019-BNK22
1.50%,
11/15/2062
(f),(
i
),(j)
2,000‌
209‌
2.08%,
11/15/2062
(f),(
i
)
1,000‌
386‌
Benchmark
2018-B6
Mortgage
Trust
3.27%,
10/10/2051
(f),(
i
)
1,000‌
819‌
3.27%,
10/10/2051
(f),(
i
)
550‌
388‌
Benchmark
2019-B12
Mortgage
Trust
3.00%,
08/15/2052
(f)
2,391‌
2,034‌
Benchmark
2019-B13
Mortgage
Trust
1.14%,
08/15/2057
(f),(
i
),(j)
1,750‌
125‌
3.00%,
08/15/2057
(f)
1,750‌
706‌
Cantor
Commercial
Real
Estate
Lending
2019-CF1
4.35%,
05/15/2052
(
i
)
1,000‌
1,085‌
CCUBS
Commercial
Mortgage
Trust
2017-C1
3.91%,
11/15/2050
(
i
)
1,000‌
1,135‌
Citigroup
Commercial
Mortgage
Trust
2018-C6
5.24%,
11/10/2051
(
i
)
1,000‌
988‌
Citigroup
Commercial
Mortgage
Trust
2019-GC41
3.00%,
08/10/2056
(f)
1,750‌
1,435‌
3.00%,
08/10/2056
(f)
1,400‌
605‌
COMM
2015-CCRE25
Mortgage
Trust
4.69%,
08/10/2048
(f),(
i
)
500‌
320‌
Csail
2015-C2
Commercial
Mortgage
Trust
3.23%,
06/15/2057
(f)
500‌
251‌
4.33%,
06/15/2057
(
i
)
500‌
332‌
DBJPM
20-C9
Mortgage
Trust
3.61%,
09/15/2053
(
i
)
500‌
516‌
Freddie
Mac
Multifamily
Structured
Pass
Through
Certificates
1.63%,
01/25/2027
(
i
),(j)
11,986‌
993‌
GS
Mortgage
Securities
Trust
2013-GCJ14
4.90%,
08/10/2046
(f),(
i
)
539‌
408‌
GS
Mortgage
Securities
Trust
2019-GC40
1.30%,
07/10/2052
(f),(
i
),(j)
9,860‌
859‌
3.00%,
07/10/2052
(f)
2,000‌
1,671‌
GS
Mortgage
Securities
Trust
2019-GC42
0.94%,
09/01/2052
(f),(
i
),(j)
3,246‌
231‌
2.80%,
09/01/2052
(f)
1,500‌
1,263‌
JPMBB
Commercial
Mortgage
Securities
Trust
2014-C21
4.81%,
08/15/2047
(f),(
i
)
1,000‌
876‌
JPMBB
Commercial
Mortgage
Securities
Trust
2015-C28
3.79%,
10/15/2048
(f),(
i
)
500‌
75‌
JPMBB
Commercial
Mortgage
Securities
Trust
2015-C29
3.85%,
05/15/2048
(
i
)
560‌
416‌
JPMCC
Commercial
Mortgage
Securities
Trust
2019-COR4
3.00%,
03/10/2052
(f)
2,000‌
1,627‌
Morgan
Stanley
Bank
of
America
Merrill
Lynch
Trust
2015-C25
4.68%,
10/15/2048
(f),(
i
)
1,000‌
626‌
4.68%,
10/15/2048
(f),(
i
)
500‌
354‌
Schedule
of
Investments
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
See
accompanying
notes.
17
BONDS
(continued)
Principal
Amount
(000’s)
Value
(000’s)
Commercial
Mortgage
Backed
Securities
(continued)
WFRBS
Commercial
Mortgage
Trust
2014-C20
3.99%,
05/15/2047
(f)
$
500‌
$
306‌
WFRBS
Commercial
Mortgage
Trust
2014-C21
3.50%,
08/15/2047
(f)
500‌
354‌
$
24,607‌
Commercial
Services
-
0.55%
APX
Group
Inc
6.75%,
02/15/2027
(f)
750‌
778‌
Food
-
0.35%
H-Food
Holdings
LLC
/
Hearthside
Finance
Co
Inc
8.50%,
06/01/2026
(f)
500‌
489‌
Healthcare
-
Services
-
0.53%
Hadrian
Merger
Sub
Inc
8.50%,
05/01/2026
(f)
750‌
746‌
Insurance
-
0.55%
Acrisure
LLC
/
Acrisure
Finance
Inc
10.13%,
08/01/2026
(f)
700‌
775‌
Leisure
Products
&
Services
-
0.44%
Constellation
Merger
Sub
Inc
8.50%,
09/15/2025
(f)
750‌
623‌
Media
-
0.19%
Cengage
Learning
Inc
9.50%,
06/15/2024
(f)
406‌
268‌
McGraw-Hill
Global
Education
Holdings
LLC
/
McGraw-Hill
Global
Education
Finance
7.88%,
05/15/2024
(f)
15‌
8‌
$
276‌
Miscellaneous
Manufacturers
-
0.58%
FXI
Holdings
Inc
7.88%,
11/01/2024
(f)
688‌
653‌
12.25%,
11/15/2026
(f)
160‌
171‌
$
824‌
Mortgage
Backed
Securities
-
1.82%
Freddie
Mac
STACR
2019-HQA3
7.65%,
09/25/2049
(f)
500‌
401‌
1.00
x
1
Month
USD
LIBOR
+
7.50%
Freddie
Mac
STACR
Remic
Trust
2020-DNA2
4.95%,
02/25/2050
(f)
500‌
300‌
1.00
x
1
Month
USD
LIBOR
+
4.80%
Freddie
Mac
STACR
Trust
2019-DNA2
10.65%,
03/25/2049
(f)
900‌
828‌
1.00
x
1
Month
USD
LIBOR
+
10.50%
Freddie
Mac
STACR
Trust
2019-DNA3
8.30%,
07/25/2049
(f)
250‌
198‌
1.00
x
1
Month
USD
LIBOR
+
8.15%
Freddie
Mac
STACR
Trust
2019-HQA2
11.40%,
04/25/2049
(f)
900‌
844‌
1.00
x
1
Month
USD
LIBOR
+
11.25%
$
2,571‌
Other
Asset
Backed
Securities
-
0.31%
Oaktree
CLO
2019-4
Ltd
7.50%,
10/20/2032
(f)
500‌
439‌
1.00
x
3
Month
USD
LIBOR
+
7.23%
Retail
-
0.40%
Staples
Inc
10.75%,
04/15/2027
(f)
700‌
561‌
Telecommunications
-
0.58%
Consolidated
Communications
Inc
6.50%,
10/01/2022
417‌
417‌
Gogo
Intermediate
Holdings
LLC
/
Gogo
Finance
Co
Inc
9.88%,
05/01/2024
(f)
372‌
397‌
$
814‌
TOTAL
BONDS
$
33,503‌
CONVERTIBLE
BONDS
-
3.05%
Principal
Amount
(000's)
Value
(000's)
Energy
-
Alternate
Sources
-
3.05%
Sunnova
Energy
International
Inc
9.75%,
04/30/2025
(d),(e),(h),(
i
)
$
1,777‌
$
4,312‌
TOTAL
CONVERTIBLE
BONDS
$
4,312‌
SENIOR
FLOATING
RATE
INTERESTS
-
0.36%
Principal
Amount
(000's)
Value
(000's)
Automobile
Parts
&
Equipment
-
0.36%
GC
EOS
Buyer
Inc
9.58%,
06/29/2026
(k)
$
700‌
$
502‌
3
Month
USD
LIBOR
+
2.75%
TOTAL
SENIOR
FLOATING
RATE
INTERESTS
$
502‌
Total
Investments
$
140,745‌
Other
Assets
and
Liabilities
-  0.32%
463‌
TOTAL
NET
ASSETS
-
100.00%
$
141,208‌
(a)
Current
yield
shown
is
as
of
period
end.
(b)
Private
Investment
Funds
have
quarterly
or
annual
redemption
frequencies
and
are
considered
restricted
securities.
Please
see
Private
Investment
Funds
sub-schedule
for
additional
information.
(c)
Non-income
producing
security
(d)
Restricted
Security.
Please
see
Restricted
Securities
sub-schedule
for
additional
information.
(e)
Fair
value
of
these
investments
is
determined
in
good
faith
by
the
Manager
under
procedures
established
and
periodically
reviewed
by
the
Board
of
Directors.
Certain
inputs
used
in
the
valuation
may
be
unobservable;
however,
each
security
is
evaluated
individually
for
purposes
of
ASC
820
which
results
in
not
all
securities
being
identified
as
Level
3
of
the
fair
value
hierarchy.
At
the
end
of
the
period,
the
fair
value
of
these
securities
totaled
$7,441
or
5.27%
of
net
assets.
(f)
Security
exempt
from
registration
under
Rule
144A
of
the
Securities
Act
of
1933.
These
securities
may
be
resold
in
transactions
exempt
from
registration,
normally
to
qualified
institutional
buyers.
At
the
end
of
the
period,
the
value
of
these
securities
totaled
$26,336
or
18.65%
of
net
assets.
(g)
Perpetual
security.
Perpetual
securities
pay
an
indefinite
stream
of
interest,
but
they
may
be
called
by
the
issuer
at
an
earlier
date.
Date
shown,
if
any,
reflects
the
next
call
date
or
final
legal
maturity
date.
Rate
shown
is
as
of
period
end.
(h)
The
value
of
these
investments
was
determined
using
significant
unobservable
inputs.
(
i
)
Certain
variable
rate
securities
are
not
based
on
a
published
reference
rate
and
spread
but
are
determined
by
the
issuer
or
agent
and
are
based
on
current
market
conditions.  These
securities
do
not
indicate
a
reference
rate
and
spread
in
their
description.
Rate
shown
is
the
rate
in
effect
as
of
period
end.
(j)
Security
is
an
Interest
Only
Strip.
(k)
Rate
information
disclosed
is
based
on
an
average
weighted
rate
of
the
underlying
tranches
as
of
period
end.
Portfolio
Summary  (unaudited)
Sector
Percent
Mortgage
Securities
19.25‌%
Utilities
18.12‌%
Financial
16.12‌%
Energy
12.57‌%
Industrial
11.70‌%
Consumer,
Non-cyclical
9.22‌%
Money
Market
Funds
5.87‌%
Basic
Materials
4.05‌%
Consumer,
Cyclical
1.43‌%
Communications
0.86‌%
Asset
Backed
Securities
0.31‌%
Investment
Companies
0.18‌%
Other
Assets
and
Liabilities
0.32‌%
TOTAL
NET
ASSETS
100.00%
Schedule
of
Investments
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
See
accompanying
notes.
18
Private
Investment
Funds
Security
Name
Acquisition
Date
Cost
Value
Redemption
Notice
(days)
Percent
of
Net
Assets
BTG
Pactual
Open
Ended
Core
US
Timberland
Fund,
LP
(a)
07/01/2019
$
8,000‌
$
8,081‌
90
5.73%
Ceres
Farmland
Holdings,
LP
(b)
11/06/2019
6,000‌
6,224‌
N/A
4.41%
Hancock
Timberland
and
Farmland
Fund,
LP
(c)
04/28/2020
120‌
120‌
N/A
0.08%
Sound
Point
CLO
Fund,
LP
(d)
08/01/2019
4,000‌
3,044‌
60
2.16%
UBS
AgriVest
Farmland
Fund,
LP
(e)
06/10/2020
800‌
809‌
60
0.57%
UBS
Trumbull
Property
Growth
&
Income
Fund,
LP
(f)
03/18/2020
5,000‌
5,103‌
60
3.61%
Total
$
23,381‌
16.56%
The
private
investment
funds
listed
in
the
table
do
not
include
any
unfunded
commitments.
Amounts
in
thousands.
(a)
The
fund
was
established
to
invest
and
reinvest
assets
of
the
investors
through
the
REIT,
primarily
in
interests
(including
ownership
or
leasehold
interests)
in
real
property,
which
is
to
be
planted
with
trees,
or
real
property
on
which
trees
are
growing
(timberland),
trees
growing
on
timberland,
or
trees
which
have
been
cut
but
not
removed
from
the
timberland
(timber);
contracts
or
agreements
for
the
cutting
and/or
use
of
timber
on
timberland.
Timber
investments
are
not
intended
to
produce
immediate
revenues.
Redemptions
are
subject
to
a
two-year
holding
period
from
the
acquisition
date.
(b)
The
fund
is
an
open-ended
investment
fund
whose
objective
is
to
generate
an
attractive
total
return
through
the
acquisition
and
management
of
farmland
in
the
Midwestern
United
States.
Redemptions
are
subject
to
a
one-year
holding
period
from
the
acquisition
date.
After
the
holding
period
has
expired,
redemptions
are
permitted
with
written
redemption
notice
five
months
prior
to
the
annual
redemption
date,
which
is
the
last
day
of
February.
(c)
This
open-end
fund
blends
the
two
asset
classes
of
timberland
and
farmland.
The
geographic
focus
will
be
in
the
U.S.,
Canada,
Australia,
New
Zealand,
Chile,
Brazil,
Uruguay,
and
Western
Europe.
Agriculture
investments
will
be
diversified
among
row
crops
(corn,
soy,
wheat,
etc.),
permanent
crops
(vines/trees),
and
commodity
crops
(cotton,
lettuce,
strawberries,
etc.).
Redemptions
are
subject
to
a
three-year
holding
period
from
the
acquisition
date.
After
the
holding
period
has
expired,
redemptions
are
permitted
with
written
redemption
notice
given
by
April
30th
of
that
year.
(d)
The
fund
was
organized
for
the
purpose
of
trading
and
investing
in
residual
tranches
and
other
notes
issued
by
and
with
respect
to
collateralized
loan
obligations.
Redemptions
are
subject
to
a
one-year
holding
period
from
the
acquisition
date.
(e)
This
open-end
fund
invests
primarily
in
U.S.
farmland.
It
is
a
well-diversified
portfolio
across
many
regions
of
the
country
and
diversified
across
row
crops,
vegetable
crops,
and
permanent
crops.
(f)
This
open-end,
commingled
private
real
estate
portfolio
combines
value-add
properties
with
capital
appreciation
potential
and
more
stable
income-generating
properties.
Properties
in
the
portfolio
typically
start
as development,
renovation,
repositioning,
or
lease-up
stage
investments,
and
transition
toward
stabilized
assets.
Restricted
Securities
Security
Name
Acquisition
Date
Cost
Value
Percent
of
Net
Assets
Enviva
Partners
LP
06/23/2020
$
1,000‌
$
1,239‌
0.88%
Sunnova
Energy
International
Inc
9.75%,
04/30/2025
05/21/2020
1,777‌
4,312‌
3.05%
Targa
Resources
Corp  
9.50%,
02/18/2021
11/18/2019
2,150‌
1,890‌
1.34%
Total
$
7,441‌
5.27%
Amounts
in
thousands.
Glossary
to
the
Schedule
of
Investments
September
30,
2020
(unaudited)
See
accompanying
notes.
19
Currency
Abbreviations
USD/$
United
States
Dollar
See
accompanying
notes.
20
Financial
Highlights
(unaudited)
Net
Asset
Value,
Beginning
of
Period
Net
Investment
Income
(Loss)
(a)
Net
Realized
and
Unrealized
Gain
(Loss)
on
Investments
Total
From
Investment
Operations
Dividends
from
Net
Investment
Income
Tax
Return
of
Capital
Distribution
Total
Dividends
and
Distributions
Net
Asset
Value,
End
of
Period
PRINCIPAL
DIVERSIFIED
SELECT
REAL
ASSET
FUND
Class
A
shares
September
30,
2020(b)
$
19
.35‌
$
0
.32‌
$
3
.79‌
$
4
.11‌
(
$
0
.34‌
)
$
–‌
(
$
0
.34‌
)
$
23
.12‌
March
31,
2020(h)
25
.00‌
0
.36‌
(
5
.61‌
)
(
5
.25‌
)
(
0
.35‌
)
(
0
.05‌
)
(
0
.40‌
)
19
.35‌
Class
Y
shares
September
30,
2020(b)
19
.39‌
0
.37‌
3
.81‌
4
.18‌
(
0
.36‌
)
–‌
(
0
.36‌
)
23
.21‌
March
31,
2020(h)
25
.00‌
0
.47‌
(
5
.64‌
)
(
5
.17‌
)
(
0
.39‌
)
(
0
.05‌
)
(
0
.44‌
)
19
.39‌
Institutional
shares
September
30,
2020(b)
19
.36‌
0
.35‌
3
.80‌
4
.15‌
(
0
.36‌
)
–‌
(
0
.36‌
)
23
.15‌
March
31,
2020(h)
25
.00‌
0
.41‌
(
5
.61‌
)
(
5
.20‌
)
(
0
.39‌
)
(
0
.05‌
)
(
0
.44‌
)
19
.36‌
See
accompanying
notes.
21
Financial
Highlights
(Continued)
(unaudited)
Total
Return
Net
Assets,
End
of
Period
(in
thousands)
Ratio
of
Expenses
to
Average
Net
Assets
Ratio
of
Net
Investment
Income
to
Average
Net
Assets
Portfolio
Turnover
Rate
21
.05‌
%
(c)
,(d)
,(e)
$
239‌
1
.67‌
%
(f)
,(g)
2
.92‌
%
(f)
37
.3‌
%
(f)
(
21
.27‌
)
(c)
,(e)
197‌
1
.93‌
(f)
,(g)
1
.86‌
(f)
56
.8‌
(f)
21
.40‌
(c)
,(d)
140,729‌
1
.17‌
(f)
,(g)
3
.44‌
(f)
37
.3‌
(f)
(
20
.98‌
)
(c)
98,501‌
1
.42‌
(f)
,(g)
2
.46‌
(f)
56
.8‌
(f)
21
.28‌
(c)
,(d)
240‌
1
.37‌
(f)
,(g)
3
.22‌
(f)
37
.3‌
(f)
(
21
.10‌
)
(c)
197‌
1
.63‌
(f)
,(g)
2
.15‌
(f)
56
.8‌
(f)
(a)
Calculated
based
on
average
shares
outstanding
during
the
period.
(b)
Six
months
ended
September
30,
2020.
(c)
Total
return
amounts
have
not
been
annualized.
(d)
Total
return
is
calculated
using
the
traded
net
asset
value
which
may
differ
from
the
reported
net
asset
value.
The
traded
net
asset
value
is
the
net
asset
value
which
a
shareholder
would
have
paid
or
received
from
a
subscription
or
redemption.
(e)
Total
return
is
calculated
without
the
front-end
sales
charge
or
contingent
deferred
sales
charge.
(f)
Computed
on
an
annualized
basis.
(g)
Reflects
Manager's
contractual
expense
limit.
(h)
Period
from
June
25,
2019,
date
operations
commenced,
through
March
31,
2020.
Shareholder
Expense
Example
Principal
Diversified
Select
Real
Asset
Fund
September
30,
2020
(unaudited)
22
As
a
shareholder
of
Principal
Diversified
Select
Real
Asset
Fund,
you
incur
two
types
of
costs:
(1)
transaction
costs,
including
sales
charges
on
purchase
payments
and
contingent
deferred
sales
charges;
and
(2)
ongoing
costs,
including
management
fees;
distribution
fees;
and
other
fund
expenses.
In
addition
to
the
expenses
the
Fund
bear
directly,
the
Fund
may
indirectly
bear
its
pro
rata
share
of
the
expenses
incurred
by
the
investment
companies
in
which
the
Fund
invests.
This
Example
is
intended
to
help
you
understand
your
ongoing
costs
(in
dollars)
of
investing
in
Principal
Diversified
Select
Real
Asset
Fund
and
to
compare
these
costs
with
the
ongoing
costs
of
investing
in
other
mutual
funds.
The
Example
is
based
on
an
investment
of
$1,000
invested
at
the
beginning
of
the
period
and
held
for
the
entire
period
April
1,
2020
to
September
30,
2020
,
unless
otherwise
noted.
Actual
Expenses
The
first
section
of
the
table
below
provides
information
about
actual
account
values
and
actual
expenses.
You
may
use
the
information
in
this
section,
together
with
the
amount
you
invested,
to
estimate
the
expenses
that
you
paid
over
the
period.
Simply
divide
your
account
value
by
$1,000
(for
example,
an
$8,600
account
value
divided
by
$1,000
=
8.6),
then
multiply
the
result
by
the
number
in
the
first
section
under
the
heading
entitled
“Expenses
Paid
During
Period”
to
estimate
the
expenses
you
paid
on
your
account
during
this
period.
Additional
account
fees
may
apply
to
certain
types
of
investment
products
which
are
not
included
in
the
table
below.
If
they
were,
the
estimate
of
expenses
you
paid
during
the
period
would
be
higher,
and
your
ending
account
value
lower,
by
this
amount.
Hypothetical
Example
for
Comparison
Purposes
The
second
section
of
the
table
below
provides
information
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
The
hypothetical
account
values
and
expenses
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period.
You
may
use
this
information
to
compare
the
ongoing
costs
of
investing
in
the
Fund
and
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
the
other
funds.
Please
note
that
the
expenses
shown
in
the
table
are
meant
to
highlight
your
ongoing
costs
only
and
do
not
reflect
any
transaction
costs,
such
as
sales
charges
on
purchase
payments,
contingent
deferred
sales
charges,
redemption
fees
or
exchange
fees.
Therefore,
the
second
section
of
the
table
is
useful
in
comparing
ongoing
costs
only,
and
will
not
help
you
determine
the
relative
total
costs
of
owning
different
funds.
In
addition,
if
these
transaction
costs
were
included,
your
costs
would
have
been
higher.
Actual
Hypothetical
Beginning
Account
Value
April
1,
2020
Ending
Account
Value
September
30,
2020
Expenses
Paid
During Period
April
1,
2020 to
September
30,
2020
(a)
Beginning
Account
Value
April
1,
2020
Ending
Account
Value
September
30,
2020 
Expenses
Paid
During Period
April
1,
2020 to
September
30,
2020
(a)
Annualized
Expense
Ratio
Principal
Diversified
Select
Real
Asset
Fund
Class
A
$
1,000.00‌
$
1,210.47‌
$
9.25‌
$
1,000.00
$
1,016.70‌
$
8.44‌
1.67‌
%
Institutional
1,000.00‌
1,212.78‌
7.60‌
1,000.00
1,018.20‌
6.93‌
1.37‌
Class
Y
1,000.00‌
1,214.00‌
6.49‌
1,000.00
1,019.20‌
5.92‌
1.17‌
(a)
Expenses
are
equal
to
a
fund's
annualized
expense
ratio
multiplied
by
the
average
account
value
over
the
period,
multiplied
by
183/365
(to
reflect
the
one-half
year
period).
23
FUND TRUSTEES
AND
OFFICERS
Under Delaware
law,
a
Board
of
Trustees
oversees
the
Fund.
The Trustees
have
financial
or
other
relevant
experience
and
meet
several
times
during
the
year
to
review
contracts, Fund
activities
and
the
quality
of
services
provided
to
the
Fund.
Each
trustee
also
serves
on
the
Board
of
Principal
Variable
Contracts
Funds,
Inc.,
Principal
Funds,
Inc.,
and Principal
Exchange-Traded
Funds.
Each
trustee
generally
serves
an
indefinite
term
until
his
or
her
successor
is
duly
elected
and
qualified
until
the
trustee
reaches
age
72
(unless
such
mandatory
age
is
waived
by
the
Board).
Trustees
considered
to
be
“interested
persons”
as
defined
in
the
Investment
Company
Act
of
1940,
as
shown
below
are
considered
to
be
interested
because
of
an
affiliation
with
the
Manager.
The
following
trustees
are
considered
not
to
be
“interested
persons”
as
defined
in
the
1940
Act.
Name,
Position
Held
with
the
Fund,
Year
of
Birth
Principal
Occupation(s)
During
past
5
years
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Trustee
Other
Directorships
Held
by
Trustee
During
Past
5
Years
Elizabeth
Ballantine
Trustee
since
2019
Member,
Nominating
and
Governance
Committee
1948
Principal,
EBA
Associates
125
Durango
Herald,
Inc.;
McClatchy
Newspapers,
Inc.
Leroy
T.
Barnes,
Jr.
Trustee
since
2019
Member,
Audit
Committee
Member,
Nominating
and
Governance
Committee
1951
Retired.
125
McClatchy
Newspapers,
Inc.;
Frontier
Communications,
Inc.;
formerly,
Herbalife
Ltd.
Craig
Damos
Lead
Independent
Trustee
since
2020
Trustee
since
2019
Member,
Nominating
and
Governance
Committee
Member,
15(c)
Committee
Member,
Executive
Committee
1954
President,
C.P.
Damos
Consulting
LLC
125
None
Mark
A.
Grimmett
Trustee
since
2019
Member,
Audit
Committee
Member,
15(c)
Committee
1960
Formerly,
Executive
Vice
President
and
CFO,
Merle
Norman
Cosmetics,
Inc.
125
None
Fritz
S.
Hirsch
Trustee
since
2019
Member,
Nominating
and
Governance
Committee
Member,
Operations
Committee
Member,
15(c)
Committee
1951
Formerly,
CEO,
MAM
USA
125
MAM
USA
Tao
Huang
Trustee
since
2019
Member,
Operations
Committee
Member,
15(c)
Committee
1962
Retired.
125
Armstrong
World
Industries,
Inc.
and
Equity
Lifestyle
Properties,
Inc.
John
D.
Kenney
Trustee
since
2020
Member,
Operations
Committee
1965
Formerly,
Legg
Mason
Global
Asset
Management
125
Formerly:
Legg
Mason
Investment
Management
Affiliates:
Brandywine
Global;
Clarion
Partners;
ClearBridge
Investments;
Entrust
Global;
Legg
Mason
Poland;
Martin
Currie
Investment
Management;
Permal
Group
(merged
into
Entrust);
QS
Investors;
RARE
Infrastructure;
Royce
and
Associates;
and
Western
Asset
Management
Karen
(“Karrie”)
McMillan
Trustee
since
2019
Member,
Operations
Committee
1961
Managing
Director,
Patomak
Global
Partners,
LLC
125
None
24
The
following
trustees
are
considered
to
be
“interested
persons”
as
defined
in
the
1940
Act,
because
of
an
affiliation
with
the
Manager.
Correspondence
intended
for
each
trustee
who
is
other
than
an
interested
trustee
may
be
sent
to
655
9th
Street,
Des
Moines,
IA
50392.
Name,
Position
Held
with
the
Fund,
Year
of
Birth
Principal
Occupation(s)
During
past
5
years
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Trustee
Other
Directorships
Held
by
Trustee
During
Past
5
Years
Elizabeth
A.
Nickels
Trustee
since
2019
Member,
Audit
Committee
1962
Retired.
125
SpartanNash;
formerly:
Charlotte
Russe;
Follet
Corporation;
PetSmart;
Spectrum
Health
Systems
Mary
M.
(“Meg”)
VanDeWeghe
Trustee
since
2019
Member,
Operations
Committee
1959
CEO
and
President,
Forte
Consulting,
Inc.
125
Denbury
Resources
Inc.
and
Helmerich
&
Payne;
Formerly:
B/E
Aerospace;
Brown
Advisory;
Denbury
Resources
Inc.;
Nalco
(and
its
successor
Ecolab);
and
WP
Carey
Name,
Position
Held
with
the
Fund,
Year
of
Birth
Principal
Occupation(s)
During
past
5
years
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Trustee
Other
Directorships
Held
by
Trustee
During
Past
5
Years
Timothy
M.
Dunbar
Chair
and
Trustee
since
2019
Member,
Executive
Committee
1957
Director,
PGI
since
2018
President,
Principal
Global
Asset
Management,
PGI,
Principal
Life
Insurance
Company
(“PLIC”),
Principal
Financial
Services,
Inc.
(“PFSI”),
and
Principal
Financial
Group
(“PFG”)
since
2018
Chair/Executive
Vice
President,
RobustWealth,
Inc.
since
2018
Director,
Post
Advisory
Group,
LLC
(“Post”)
since
2018
Executive
Vice
President/Chief
Investment
Officer,
PLIC,
PFSI
and
PFG
(2014-2018)
125
None
Patrick
Halter
Trustee
since
2019
Member,
Executive
Committee
1959
Chief
Executive
Officer
and
President,
PGI
since
2018
Chief
Operating
Officer,
PGI
(2017-2018)
Chair,
PGI
since
2018
Director,
PGI
(2003-2018)
Director,
Finisterre
Capital
LLP
since
2018
Director,
Origin
Asset
Management
LLP
since
2018
Chair,
Post
since
2017
Chief
Executive
Officer,
Principal
Real
Estate
Investors,
LLC
(“PREI”)
since
2005
Chair,
PREI
since
2004
Chair,
Spectrum
Asset
Management,
Inc.
since
2017
Director,
CCIP,
LLC
since
2017
125
None
25
The
following
table
presents
officers
of
the
Fund.
Name,
Position
Held
with
the
Fund,
Address,
and
Year
of
Birth
Principal
Occupation(s)
During
past
5
years
Kamal
Bhatia
President,
Chief
Executive
Officer
Des
Moines,
IA
50392
1972
President,
PFG,
PFSI,
and
PLIC
since
2019
Senior
Vice
President,
OppenheimerFunds
(2011-
2019)
Principal
Executive
Officer,
OC
Private
Capital
(2017-2019)
Randy
D.
Bolin
Assistant
Tax
Counsel
1961
Vice
President
and
Associate
General
Counsel,
PGI
since
2016
Assistant
General
Counsel,
PGI
(2007-2016)
Vice
President
and
Associate
General
Counsel,
PFSI
and
PLIC
since
2013
Tracy
W.
Bollin
Chief
Financial
Officer
Des
Moines,
IA
50392
1970
Managing
Director,
PGI
since
2016
Senior
Vice
President,
PFD
since
2015
Chief
Financial
Officer,
PFD
(2010-2016)
Chief
Operating
Officer
and
Senior
Vice
President,
PMC
(2015–2017)
Director,
PMC
(2014–2017)
President,
PSS
since
2015
Gina
L.
Graham
Treasurer
Des
Moines,
IA
50392
1965
Vice
President/Treasurer,
PFA
since
2016
Vice
President/Treasurer,
PFD
since
2016
Vice
President/Treasurer,
PGI
since
2016
Vice
President/Treasurer,
PLIC
since
2016
Vice
President/Treasurer,
PMC
(2016-2017)
Vice
President/Treasurer,
PREI
since
2016
Vice
President/Treasurer,
PSI
since
2016
Vice
President/Treasurer,
PSS
since
2016
Laura
B.
Latham
Assistant
Counsel
and
Assistant
Secretary
Des
Moines,
IA
50392
1986
Counsel,
PGI
since
2018
Prior
thereto,
Attorney
in
Private
Practice
Diane
K.
Nelson
AML
Officer
Des
Moines,
IA
50392
1965
Chief
Compliance
Officer/AML
Officer,
PSS
since
2015
Sara
L.
Reece
Vice
President
and
Controller
Des
Moines,
IA
50392
1975
Director
-
Accounting,
PLIC
since
2015
Teri
R.
Root
Chief
Compliance
Officer
Des
Moines,
IA
50392
1979
Chief
Compliance
Officer
–
Funds,
PGI
since
2018
Interim
Chief
Compliance
Officer
(2018)
Deputy
Chief
Compliance
Officer
(2015-2018)
Deputy
Chief
Compliance
Officer,
PGI
since
2017
Vice
President
and
Chief
Compliance
Officer,
PMC
(2015–2017)
Vice
President,
PSS
since
2015
Britney
L.
Schnathorst
Assistant
Counsel
and
Assistant
Secretary
Des
Moines,
IA
50392
1981
Counsel,
PLIC
since
2013
Adam
U.
Shaikh
Assistant
Counsel
Des
Moines,
IA
50392
1972
Assistant
General
Counsel,
PGI
since
2018
Counsel,
PGI
(2017-2018)
Counsel,
PLIC
since
2006
Counsel,
PMC
(2014-2017)
John
Sullivan
Assistant
Counsel
and
Assistant
Secretary
Des
Moines,
IA
50392
1970
Counsel,
PGI
since
2019
Prior
thereto,
Attorney
in
Private
Practice
26
The
15(c)
Committee’s
primary
purpose
is
to
assist
the
Board
in
performing
the
annual
review
of
the
Fund’s
advisory
and
sub-advisory
agreements
pursuant
to
Section
15(c)
of
the
1940
Act.
The
Committee
responsibilities
include
requesting
and
reviewing
materials.
The
Audit
Committee’s
primary
purpose
is
to
assist
the
Board
in
fulfilling
certain
of
its
responsibilities.
The
Audit
Committee
serves
as
an
independent
and
objective
party
to
monitor
the
Fund
Complex’s
accounting
policies,
financial
reporting
and
internal
control
system,
as
well
as
the
work
of
the
independent
registered
public
accountants.
The
Audit
Committee
assists
Board
oversight
of
1)
the
integrity
of
the
Fund
Complex’s
financial
statements;
2)
the
Fund
Complex’s
compliance
with
certain
legal
and
regulatory
requirements;
3)
the
independent
registered
public
accountants’
qualifications
and
independence;
and
4)
the
performance
of
the
Fund
Complex’s
independent
registered
public
accountants.
The
Audit
Committee
also
provides
an
open
avenue
of
communication
among
the
independent
registered
public
accountants,
the
Manager’s
internal
auditors,
Fund
Complex
management,
and
the
Board.
The
Executive
Committee’s
primary
purpose
is
to
exercise
certain
powers
of
the
Board
when
the
Board
is
not
in
session.
When
the
Board
is
not
in
session,
the
Committee
may
exercise
all
powers
of
the
Board
in
the
management
of
the
business
of
the
Fund
Complex
except
the
power
to
1)
authorize
dividends
or
distributions
on
stock;
2)
issue
stock,
except
as
permitted
by
law;
3)
recommend
to
the
stockholders
any
action
which
requires
stockholder
approval;
4)
amend
the
bylaws;
or
5)
approve
any
merger
or
share
exchange
which
does
not
require
stockholder
approval.
The
Nominating
and
Governance
Committee’s
primary
purpose
is
to
oversee
the
structure
and
efficiency
of
the
Board
and
the
committees
established
by
the
Board.
The
Committee
responsibilities
include
evaluating
Board
membership
and
functions,
committee
membership
and
functions,
insurance
coverage,
and
legal
matters.
The
nominating
functions
of
the
Committee
include
selecting
and
nominating
all
candidates
who
are
not
“interested
persons”
of
the
Fund
Complex
for
election
to
the
Board.
Generally,
the
Committee
requests
trustee
nominee
suggestions
from
the
committee
members
and
management.
In
addition,
the
Committee
will
consider
Trustee
candidates
recommended
by
shareholders
of
the
Fund
Complex.
Recommendations
should
be
submitted
in
writing
to
Principal
Funds,
Inc.
at
711
High
Street,
Des
Moines,
IA
50392.
When
evaluating
a
person
as
a
potential
nominee
to
serve
as
an
Independent
Trustee,
the
Committee
will
generally
consider,
among
other
factors:
age;
education;
relevant
business
experience;
geographical
factors;
whether
the
person
is
“independent”
and
otherwise
qualified
under
applicable
laws
and
regulations
to
serve
as
a
trustee;
and
whether
the
person
is
willing
to
serve,
and
willing
and
able
to
commit
the
time
necessary
for
attendance
at
meetings
and
the
performance
of
the
duties
of
an
independent
trustee.
The
Committee
also
meets
personally
with
the
nominees
and
conducts
a
reference
check.
The
final
decision
is
based
on
a
combination
of
factors,
including
the
strengths
and
the
experience
an
individual
may
bring
to
the
Board.
The
Committee
believes
the
Board
generally
benefits
from
diversity
of
background,
experience
and
views
among
its
members,
and
considers
these
factors
in
evaluating
the
composition
of
the
Board.
The
Board
does
not
use
regularly
the
services
of
any
professional
search
firms
to
identify
or
evaluate
or
assist
in
identifying
or
evaluating
potential
candidates
or
nominees.
The
Operations
Committee’s
primary
purpose
is
to
oversee
the
provision
of
administrative
and
distribution
services
to
the
Funds
Complex,
communications
with
the
Fund
Complex’s
shareholders,
and
review
and
oversight
of
the
Fund
Complex’s
operations.
Name,
Position
Held
with
the
Fund,
Address,
and
Year
of
Birth
Principal
Occupation(s)
During
past
5
years
Dan
Westholm
Assistant
Treasurer
Des
Moines,
IA
50392
1966
Assistant
Vice
President/Treasurer,
PGI
since
2017
Assistant
Vice
President/Treasury,
PFA
since
2013
Assistant
Vice
President/Treasury,
PFD
since
2013
Assistant
Vice
President/Treasury,
PLIC
since
2014
Assistant
Vice
President/Treasury,
PMC
(2013-
2017)
Assistant
Vice
President/Treasury,
PSI
since
2013
Assistant
Vice
President/Treasury,
PSS
since
2013
Beth
Wilson
Vice
President
and
Secretary
Des
Moines,
IA
50392
1956
Director
and
Secretary
–
Funds,
PLIC
Clint
Woods
Counsel,
Vice
President,
and
Assistant
Secretary
Des
Moines,
IA
50392
1961
Of
Counsel
(2017-2018)
Vice
President
(2016-2017)
Counsel
(2015-2017)
Vice
President,
PLIC
since
2015
Associate
General
Counsel
and
Corporate
Secretary,
PLIC
since
2013
Jared
Yepsen
Assistant
Tax
Counsel
Des
Moines,
IA
50392
1981
Counsel,
PGI
since
2017
Counsel,
PLIC
since
2015
27
Additional
information
about
the
Fund
is
available
in
the
Prospectus
dated
August
1,
2020
and
as
supplemented,
and
the
Statement
of
Additional
Information
dated
August
1,
2020
and
as
supplemented.
These
documents
may
be
obtained
free
of
charge
by
writing
Principal
Diversified
Select
Real
Asset
Fund,
P.O.
Box
219971,
Kansas
City,
MO
64121-9971,
or
telephoning
1-800-222-5852.
The
prospectus
may
be
viewed
at
www.PrincipalFunds.com/interval-funds.
PROXY
VOTING
POLICIES
A
description
of
the
policies
and
procedures
the
Fund
uses
to
determine
how
to
vote
proxies
relating
to
portfolio
securities
and
the
results
of
the
proxy
votes
for
the
most
recent
twelve
months
ended
June
30
may
be
obtained
free
of
charge
by
telephoning
1-800-222-5852,
or
on
the
SEC
website
at
www.sec.gov.
SCHEDULES
OF
INVESTMENTS
The
Fund
files
complete
schedules
of
investments
with
the
Securities
and
Exchange
Commission
for
the
first
and
third
quarters
of
each
fiscal
year
as
an
exhibit
to
its
reports
on
Form
N-PORT.
The
Fund’s
Form
N-PORT
reports
are
available
on
the
Commission’s
website
at
www.
sec.gov.
28
BOARD
CONSIDERATION
OF
INVESTMENT
ADVISORY
CONTRACTS
During
the
period
covered
by
this
report,
the
Board
of
Directors
of
Principal
Diversified
Select
Real
Asset
Fund
(“DSRA”)
approved
(1)
an
amended
Subadvisory
Agreement
between
ClearBridge
RARE
Infrastructure
(North
America)
Pty
Limited
(“ClearBridge”)
and
Principal
Global
Investors,
LLC
(the
“Manager”
or
“PGI”);
(2)
a
new
subadvisory
agreement
between
PGI
and
ClearBridge;
and
(3)
the
annual
review
and
renewal
of
the
Management
Agreement
and
various
subadvisory
agreements
for
the
Fund.
ClearBridge
Amended
Subadvisory
Agreement
On
June
8,
2020,
the
Board
considered
the
approval
of
an
amended
subadvisory
agreement
(the
“Subadvisory
Agreement”)
between
the
Manager
and
ClearBridge
RARE
Infrastructure
(North
America)
Pty
Limited
(the
“Subadvisor”)
in
connection
with
a
proposal
to
change
the
methodology
for
calculating
the
subadvisory
fee
and
to
amend
the
subadvisory
fee
schedule
to
reduce
the
effective
subadvisory
fee
rate
payable
at
certain
asset
levels.
Nature,
Quality
and
Extent
of
Services
The
Board
reviewed
materials
received
from
the
Manager
regarding
the
proposed
amendment
to
the
Fund’s
Subadvisory
Agreement
and
noted
that
because
the
subadvisory
fee
was
paid
by
the
Manager,
the
amendment
would
not
change
the
management
fee
rate
paid
by
the
Fund.
The
Board
considered
the
Manager’s
representation
that
the
amendment
would
not
reduce
the
quality
or
quantity
of
the
services
the
Subadvisor
provides
to
the
Fund
and
that
the
Subadvisor’s
obligations
under
the
Subadvisory
Agreement
would
remain
the
same
in
all
material
respects.
The
Board
also
considered
that
the
Manager
was
not
proposing
any
material
changes
to
the
terms
of
the
Subadvisory
Agreement
other
than
the
methodology
for
calculating
the
subadvisory
fee
and
the
subadvisory
fee
schedule.
The
Board
considered
that
they
had
last
approved
the
Subadvisory
Agreement
for
the
Fund
during
the
annual
contract
renewal
process
that
concluded
at
the
Board
of
Trustees’
September
2019
meeting.
They
noted
that
during
the
annual
contract
renewal
process,
they
had
considered
the
nature,
quality
and
extent
of
the
services
provided
by
the
Subadvisor
under
the
Subadvisory
Agreement
and
had
concluded,
based
upon
the
information
provided,
that
the
terms
of
the
Subadvisory
Agreement
were
reasonable
and
that
approval
of
the
Subadvisory
Agreement
was
in
the
best
interests
of
the
Fund.
Overall
Conclusions
Based
upon
all
of
the
information
considered,
the
Board
concluded
that
it
was
in
the
best
interests
of
the
Fund
to
approve
the
amended
Subadvisory
Agreement.
ClearBridge
New
Subadvisory
Agreement
On
June
8,
2020,
the
Board
considered
the
approval
of
a
new
subadvisory
agreement
(the
“New
Subadvisory
Agreement”)
between
the
Manager
and
ClearBridge
RARE
Infrastructure
(North
America)
Pty
Limited
(the
“Subadvisor”)
with
respect
to
the
public
global
infrastructure
investment
sleeve
of
the
Fund.
The
New
Subadvisory
Agreement
was
proposed
in
light
of
an
anticipated
change
in
control
transaction
with
respect
to
the
Subadvisor
(such
transaction
subsequently
occurring
on
July
31,
2020).
This
transaction
resulted
in
an
“assignment”
(as
defined
in
the
Investment
Company
Act
of
1940)
of
the
then
current
subadvisory
agreement
between
the
Manager
and
the
Subadvisor
(the
“Current
Subadvisory
Agreement”),
causing
the
Current
Subadvisory
Agreement
to
terminate
automatically.
The
Manager
proposed
that
the
Board
approve
the
New
Subadvisory
Agreement
to
take
effect
upon
the
termination
of
the
Current
Subadvisory
Agreement
in
order
to
allow
the
Subadvisor
to
continue
to
provide
portfolio
management
services
to
the
Fund
following
the
change
in
control.
The
Board
reviewed
materials
received
from
the
Manager
regarding
the
proposed
change
in
control
transaction.
The
Board
considered
that
they
had
last
approved
the
annual
renewal
of
the
Current
Subadvisory
Agreement
for
the
Fund
during
the
annual
contract
renewal
process
that
concluded
at
the
Board
of
Trustees’
September
2019
meeting,
and
that
they
had
subsequently
approved
an
amendment
to
the
Current
Subadvisory
Agreement
at
the
Board
of
Trustees’
June
2020
meeting
to
change
the
methodology
for
calculating
the
subadvisory
fee
and
to
amend
the
subadvisory
fee
schedule
to
reduce
the
effective
subadvisory
fee
rate
payable
at
certain
asset
levels.
They
noted
that
during
the
annual
contract
renewal
process,
they
had
considered
the
nature,
quality
and
extent
of
the
services
provided
by
the
Subadvisor
under
the
Current
Subadvisory
Agreement
and
had
concluded,
based
upon
the
information
provided,
that
the
terms
of
the
Current
Subadvisory
Agreement
were
reasonable
and
that
approval
of
the
Current
Subadvisory
Agreement
was
in
the
best
interest
of
the
Fund.
The
Board
considered
the
Manager’s
statement
that
there
were
no
anticipated
changes
to
the
current
portfolio
management
team,
investment
philosophy
or
process
at
the
Subadvisor,
that
the
change
in
ownership
was
not
expected
to
impact
the
nature,
quality
or
extent
of
services
that
the
Subadvisor
provides
to
the
Fund
and
that
the
Manager,
after
considering
the
assignment,
continued
to
believe
that
the
Subadvisor
is
an
appropriate
subadvisor
for
the
Fund.
The
Board
also
noted
the
Manager’s
statement
that
the
New
Subadvisory
Agreement
for
the
Fund
would
be
identical
to
the
Current
Subadvisory
Agreement
in
all
material
respects
(including
the
subadvisory
fee
schedule).
In
addition,
the
Board
considered
that
the
New
Subadvisory
Agreement
is
subject
to
approval
by
the
Fund’s
shareholders,
and
that
the
Subadvisor
will
cover
the
costs
of
filing
and
distributing
an
information
statement.
29
Based
upon
all
of
the
information
considered,
the
Board
concluded
that
it
was
in
the
best
interests
of
the
Fund
to
approve
the
New
Subadvisory
Agreement
to
take
effect
following
the
change
in
control
of
the
Subadvisor
and,
accordingly,
recommended
that
the
shareholders
of
the
Fund
vote
to
approve
the
New
Subadvisory
Agreement.
Annual
Review
and
Renewal
of
Management
Agreement
and
Subadvisory
Agreements
At
its
September
15,
2020
meeting,
the
Board
performed
its
annual
review
and
renewal
process
relating
to
the
Management
Agreement
and
the
Subadvisory
Agreements
for
the
Fund.
Section
15(c)
of
the
Investment
Company
Act
of
1940
(the
“1940
Act”)
requires
the
Board,
including
a
majority
of
the
Directors
who
have
no
direct
or
indirect
interest
in
the
investment
advisory
agreements
and
who
are
not
“interested
persons”
of
PFI,
as
defined
in
the
1940
Act
(the
“Board”),
annually
to
review
and
to
consider
the
continuation
of:
(1)
the
Management
Agreement
between
Principal
Global
Investors,
LLC
(the
“Manager”)
and
DSRA;
and
(2)
the
Subadvisory
Agreements
between
the
Manager
and
each
of
ClearBridge
RARE
Infrastructure
(North
America)
Pty
Limited;
DDJ
Capital
Management,
LLC;
KLS
Diversified
Asset
Management
LP;
Principal
Real
Estate
Investors,
LLC;
and
Tortoise
Capital
Advisors,
L.L.C.;
(collectively,
the
“Subadvisors”).
The
Management
Agreement
and
the
Subadvisory
Agreements
are
collectively
referred
to
as
the
“Advisory
Agreements.”
The
Board
considered
the
factors
and
reached
the
conclusions
described
below
relating
to
the
continuation
of
the
Advisory
Agreements.
In
evaluating
the
Advisory
Agreements,
the
Board
reviewed
a
broad
range
of
information
requested
for
this
purpose,
including,
among
other
information,
information
regarding
performance,
advisory
fees,
total
expenses,
profitability
from
the
Advisory
Agreements
to
the
Manager
and
information
about
economies
of
scale.
The
Board
reviewed
the
materials
provided
and
concluded
that
it
was
provided
all
information
reasonably
necessary
to
evaluate
the
Advisory
Agreements.
Management
Agreement
The
Board
considered,
among
other
factors,
that
the
Manager
and
its
affiliates
have
demonstrated
a
long-term
commitment
to
support
the
Fund,
including
undertakings
to
cap
Fund
expenses
and/or
waive
management
fees
for
the
Fund.
In
addition,
the
Board
considered
the
following
factors
for
the
Fund.
The
Board
concluded
that
a
relationship
with
a
capable
and
conscientious
investment
adviser
is
in
the
best
interest
of
the
Fund.
Nature,
Quality
and
Extent
of
Services
The
Board
considered
the
nature,
quality
and
extent
of
the
services
provided
under
the
Management
Agreement,
including
accounting
and
administrative
services,
as
applicable.
The
Board
considered
the
experience
and
skills
of
senior
management
leading
Fund
operations,
the
experience
and
skills
of
the
personnel
performing
the
functions
under
the
Management
Agreement
and
the
resources
made
available
to
such
personnel,
the
ability
of
the
Manager
to
attract
and
retain
high-quality
personnel
and
the
organizational
depth
and
stability
of
the
Manager.
The
Board
concluded
that
appropriate
resources
were
provided
under
the
Management
Agreement.
The
Board
also
considered
that
for
the
Fund,
during
the
periods
reviewed,
the
Manager
had
delegated
day-to-day
portfolio
management
responsibility
to
the
subadvisors.
The
Board
noted
that
the
Manager’s
process
for
the
selection
of
Subadvisors
emphasizes
the
selection
of
Principal-affiliated
subadvisors
that
are
determined
to
be
qualified
under
the
Manager’s
due
diligence
process,
but
that
the
Manager
will
select
an
unaffiliated
subadvisor
to
manage
all
or
a
portion
of
the
Fund’s
investment
portfolio
when
deemed
necessary
or
appropriate
based
upon
a
consideration
of
the
Fund’s
investment
mandate
and
available
expertise
and
resources
within
the
Principal
organization.
With
respect
to
the
Fund
with
unaffiliated
subadvisors,
the
Board
considered
the
due
diligence
process
developed
by
the
Manager
for
purposes
of
selecting
a
qualified
unaffiliated
subadvisor
for
the
Fund.
The
Board
considered
the
Manager’s
due
diligence
process
for
monitoring
and
replacing
Subadvisors
and
for
monitoring
the
investment
performance
of
the
Manager.
The
Board
also
considered
the
compliance
program
established
by
the
Manager
for
the
Fund,
the
quality
of
that
program
and
the
level
of
compliance
attained
by
the
Fund.
The
Board
noted
that
they
had
reviewed
annual
best
execution
and
soft
dollar
reports
and
information
regarding
the
research
payment
accounts
for
the
Fund
and
included
this
information
in
their
consideration
of
the
renewal
of
the
Advisory
Agreements.
Based
upon
all
relevant
factors,
the
Board
concluded
that
the
nature,
quality
and
extent
of
the
services
provided
by
the
Manager
to
the
Fund
under
the
Management
Agreement
was
satisfactory.
Investment
Performance
The
Board
reviewed
the
Fund’s
investment
performance
for
a
period
starting
at
the
Fund’s
inception
and
ending
on
March
31,
2020.
The
Board
noted
that
the
Fund
had
commenced
operations
recently
and,
accordingly,
limited
performance
information
was
considered.
Comparative
performance
information
was
based
upon
data
provided
by
Refinitiv
(formerly
Lipper).
The
Board
also
considered
whether
investment
results
were
consistent
with
the
Fund’s
investment
objective(s)
and
policies.
The
Board
concluded
that
the
Fund’s
investment
returns
met
acceptable
levels
of
investment
performance.
Investment
Management
Fees
The
Board
considered
the
Fund’s
effective
management
fee
rate.
For
the
Fund,
other
than
as
noted
below,
the
Board
received
certain
information
from
Broadridge.
The
Board
received
information
comparing
the
Fund’s
(1) effective
contractual
management
fee
rate
at
30
current
asset
levels
and
at
theoretical
asset
levels,
(2) effective
net
management
fee
rate
(after
any
fee
waivers)
at
average
fiscal-year
asset
levels,
(3) actual
non-management
expense
rate
at
average
fiscal-year
asset
levels
and
(4) total
net
expense
ratio
(including,
as
applicable,
acquired
fund
fees
and
expenses
and
after
any
expense
caps
or
fee
waivers)
at
average
fiscal-year
asset
levels
for
Institutional
Class
shares
for
DSRA,
to
investment
advisory
fee
rates,
non-management
expense
rates
and
expense
ratios
of
funds
in
a
peer
group
selected
by
Broadridge
(“Expense
Group”)
and
a
broad-based,
industry
category
defined
by
Broadridge
(“Expense
Universe”).
In
evaluating
the
management
fee
rates,
the
Board
considered
a
variety
of
factors,
including
the
effective
fee
rates,
breakpoints,
comparisons
to
fee
rates
of
peer
group
funds
and
other
funds
and
nonfund
accounts
managed
by
the
Manager,
subadvisory
fee
rates
paid,
services
provided,
investment
performance,
total
net
expense
ratios,
profitability,
the
existence
and
sharing
of
economies
of
scale,
fall-out
benefits
and
expense
caps
and
fee
waivers.
The
Board
considered
the
impact
of
changes
in
subadvisory
fee
rates
put
into
effect
since
September
2019.
Profitability
The
Board
reviewed
detailed
information
regarding
revenues
the
Manager
received
under
the
Management
Agreement
and
the
estimated
direct
and
indirect
costs
incurred
in
providing
to
the
Fund
the
services
described
in
the
Management
Agreement
for
the
year
ended
December
31,
2019.
The
Board
also
considered
the
returns
on
revenue
generated
in
connection
with
the
payment
of
subadvisory
fees
to
an
affiliated
Subadvisor
(Principal
Real
Estate
Investors
LLC)
and
the
aggregated
return
on
revenue
to
the
Manager
and
its
affiliates
for
the
year
ended
December
31,
2019.
The
Board
concluded
that
the
management
fee
for
the
Fund
was
reasonable.
Economies
of
Scale
The
Board
considered
whether
there
are
economies
of
scale
with
respect
to
the
management
of
the
Fund
and
whether
the
Fund
benefits
from
any
such
economies
of
scale.
The
Board
considered
the
Manager’s
biennial
breakpoint
study
that
was
received
by
the
Board
in
March
2020
and
the
Manager’s
representation
that
the
Fund
is
initially
priced
as
though
the
Fund
had
reached
scale,
reflecting
a
sharing
of
economies
of
scale.
The
Board
then
reviewed
the
levels
at
which
breakpoints
occur,
the
incremental
declines
in
management
fee
rates
at
each
breakpoint
and
the
amount
of
fee
reductions
that
had
been
provided
to
shareholders
as
a
result
of
these
breakpoints.
The
Board
considered
cost
saving
passed
along
to
the
Fund
as
a
result
of
certain
expense
caps
and
fee
waivers.
The
Board
considered
whether
the
effective
management
fee
rate
for
the
Fund
under
the
Management
Agreement
is
reasonable
in
relation
to
the
asset
size
of
the
Fund.
The
Board
also
noted
management’s
explanation
of
efficiencies
in
the
Manager’s
cost
structure.
The
Board
concluded
that
the
fee
schedule
for
the
Fund
reflects
an
appropriate
level
of
sharing
of
any
economies
of
scale.
Other
Benefits
to
Manager
The
Board
also
considered
the
character
and
amount
of
other
incidental
benefits
received
by
the
Manager
and
its
affiliates
from
their
relationships
with
the
Fund.
The
Board
noted
that
the
Manager
uses
fund
commissions
to
buy
Section
28(e)
eligible
products
and
services.
The
Board
concluded
that
the
incidental
benefits
received
by
the
Manager
and
its
affiliates
were
appropriate.
Subadvisory
Agreements
Nature,
Quality
and
Extent
of
Services
The
Board
considered
the
nature,
quality
and
extent
of
the
services
provided
under
each
Subadvisory
Agreement.
The
Board
considered
the
reputation,
qualifications
and
background
of
the
Subadvisor,
the
investment
approach
of
the
Subadvisor,
the
experience
and
skills
of
investment
personnel
responsible
for
the
day-to-day
management
of
the
Fund
and
the
resources
made
available
to
such
personnel.
The
Board
also
considered
the
Subadvisors’
compliance
with
investment
policies
and
general
legal
compliance.
Based
upon
all
relevant
factors,
the
Board
concluded
that
the
nature,
quality
and
extent
of
the
services
provided
by
the
Subadvisors
to
the
Fund
under
the
Subadvisory
Agreements
are
satisfactory.
Investment
Performance
The
Manager
had
advised
the
Board
that
the
investment
services
delivered
by
each
Subadvisor
to
the
Fund
were
reasonable.
Based
upon
all
relevant
factors,
the
Board
concluded
that
each
Subadvisor
is
qualified
and
that
either:
(1)
the
investment
performance
of
the
Subadvisor
met
acceptable
levels
of
investment
performance;
or
(2)
although
the
Fund
experienced
underperformance
from
the
applicable
Subadvisor,
based
upon
the
Fund’s
particular
circumstances
or
in
light
of
remedial
efforts
being
taken
to
improve
performance,
as
applicable,
it
was
in
the
best
interests
of
the
Fund
to
continue
to
closely
monitor
performance
and
to
renew
the
Subadvisory
Agreement.
In
each
case
involving
underperformance,
the
Board
concluded
that
the
Manager
was
providing
effective
monitoring.
Fees,
Economies
of
Scale
and
Profitability
The
Board
considered
the
subadvisory
fee
rates,
noting
that
the
Manager
compensates
each
Subadvisor
from
its
own
management
fee,
so
that
shareholders
pay
only
the
management
fee.
For
the
Fund,
the
Board
received
certain
information
from
Broadridge
comparing
the
Fund’s
subadvisory
fee
rate
at
current
asset
levels
and
at
theoretical
asset
levels
to
subadvisory
fee
rates
of
subadvised
funds
in
the
Expense
Group
and,
if
available,
the
Expense
Universe.
31
The
Board
considered
whether
there
are
economies
of
scale
with
respect
to
the
subadvisory
services
provided
to
the
Fund
and,
if
so,
whether
the
subadvisory
fees
reflect
such
economies
of
scale
through
breakpoints
in
fee
schedules
or
whether
the
subadvisory
fee
schedule
is
otherwise
appropriate
at
current
asset
levels.
In
addition,
in
evaluating
the
subadvisory
fee
rates
and
the
factor
of
profitability,
with
respect
to
unaffiliated
Subadvisors,
the
Board
considered
that
the
subadvisory
fee
rate
was
negotiated
at
arm’s
length
between
the
Manager
and
the
Subadvisor.
The
Board
considered
the
profitability
of
the
affiliated
Subadvisors
in
conjunction
with
their
review
of
the
profitability
of
the
Manager.
Other
Benefits
to
Subadvisors
The
Board
also
considered
the
character
and
amount
of
other
incidental
benefits
received
by
each
Subadvisor
when
evaluating
the
subadvisory
fees.
The
Board
considered
as
a
part
of
this
analysis
each
Subadvisor’s
brokerage
practices,
soft
dollar
practices
and
use
of
research
payment
accounts.
The
Board
concluded
that
the
incidental
benefits
received
by
each
Subadvisor
were
appropriate.
Overall
Conclusions
Based
upon
all
of
the
information
considered
and
the
conclusions
reached,
the
Board
determined
that
the
terms
of
each
Advisory
Agreement,
including
the
fee
rate
payable
thereunder,
continue
to
be
fair
and
reasonable
and
that
the
continuation
of
each
Advisory
Agreement,
with
the
actions
proposed
by
the
Manager,
is
in
the
best
interests
of
the
Fund.
Principal
Funds
Distributor,
Inc.
711
High
Street
Des
Moines,
IA
50392-6370
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not
use
this
address
for
business
correspondence
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Investing
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This
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published
as
general
information
for
the
shareholders
of
Principal
Diversified
Select
Real
Asset
Fund.
This
material
is
not
authorized
for
distribution
unless
preceded
or
accompanied
by
a
current
prospectus
or
a
summary
prospectus
that
includes
more
information
regarding
the
risk
factors,
expenses,
policies,
and
objectives
of
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Investors
should
read
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or
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To
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©
2020
Principal
Financial
Services,
Inc.
|
INF100SAR-01
|
09/2020
|
949589

ITEM 2 – CODE OF ETHICS

 
Not applicable to semi-annual reports.
 

ITEM 3 – AUDIT COMMITTEE FINANCIAL EXPERT

 
Not applicable to semi-annual reports.
 

ITEM 4 – PRINCIPAL ACCOUNTANT FEES AND SERVICES

 
Not applicable to semi-annual reports.
 

ITEM 5 – AUDIT COMMITTEE OF LISTED REGISTRANTS

 
Not applicable.
 

ITEM 6 – SCHEDULE OF INVESTMENTS

 
Schedule of Investments is included as part of the Report to Shareholders filed under Item 1 of this form.
 
ITEM 7 – DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
 
Not applicable to semi-annual reports.
 
ITEM 8 – PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
 
Not applicable to semi-annual reports.
 
ITEM 9 – PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS
 
Not applicable.
 

ITEM 10 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

There have been no material changes to the procedures by which shareholders may recommend nominees to registrant’s board.

 

ITEM 11 – CONTROLS AND PROCEDURES

 
a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing).
 
(b) There have been no changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
 

ITEM 12 – DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

 
Not applicable.
 
ITEM 13 – EXHIBITS
 
(a)(1) Code of Ethics - Not applicable to semi-annual reports.
 
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act are attached hereto as
Exhibit 99.CERT
.
 
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment Company Act is attached hereto as
Exhibit 99.906CERT
.

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
(Registrant)
Principal Diversified Select Real Asset Fund
 
 
 
By
/s/ Kamal Bhatia
              Kamal Bhatia, President and CEO
 
Date
11/16/2020
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
By
/s/ Kamal Bhatia
              Kamal Bhatia, President and CEO
 
Date
11/16/2020
 
 
 
By
/s/ Tracy W. Bollin
              Tracy W. Bollin, Chief Financial Officer
 
Date
11/16/2020